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Global Stocks Rise on Tech Sector Strength

Stocks around the world rose on Tuesday amid continuing technology sector gains and a wave of political optimism around Brexit.

The Stoxx Europe 600 was up 0.1% in early trading, buoyed by an increase for its autos sector. Renault shares climbed 2% after the company and partners Mitsubishi Motors and Nissan Motors announced plans to create a new joint decision-making body, as they attempt to move on from the turmoil caused by the arrest of former Nissan chairman and Renault chief executive Carlos Ghosn.

While the export-exposed autos sector extended its 2019 rally amid hopes that U.S. and Chinese negotiators will soon sign a trade deal, it remains 21% lower over the past year.

The British pound has climbed 1.6% against the U.S. dollar since early Monday, and was up a further 0.5% on Tuesday after Prime Minister Theresa May secured concessions over Brexit from the European Union. The British Parliament was set to vote on her revised deal later Tuesday. The U.K.’s FTSE 100 benchmark fell 0.5%, with the index tending to move inversely to the British pound.

The changes to the Brexit deal clarify the U.K.’s ability to sever economic ties with the EU in the event of an impasse in future trade negotiations.

Still, while the concessions give Mrs. May a “fighting chance of passing the Withdrawal Agreement… the odds still appear to be stacked against her,” said Lee Hardman, currency analyst at MUFG in a note. A defeat would likely see the pound give up most of its short-term gains, he said.

Upbeat trading in Europe echoed similar moves in Asia, where several major indexes extended their early-week rallies, with technology stocks helping power those gains. Hong Kong’s Hang Seng was up 1.4%, with sector giant Tencent Holdings up 1.8%, while the tech-heavy Korean Kospi was up 0.9%, boosted by a 2.3% increase for index heavyweight Samsung Electronics.

Asian tech stocks took their lead from their U.S. counterparts, which were boosted Monday as chip maker Nvidia agreed to buy computer-networking supplier Mellanox Technologies in a deal valued at $6.9 billion. Nvidia jumped 7% on the day, rising a further 0.5% in after-hours trading, while Nasdaq-listed Mellanox added 0.2% to its 7.8% increase after the market close.

Ratings upgrades for Apple and Facebook allowed two of the U.S.’s largest tech companies to further fuel the sector’s rise.

Those increases helped U.S. indexes snap five-day losing streaks, with U.S. futures putting stocks on course for a second straight day of gains. The S&P 500, the Dow Jones Industrial Average, and the Nasdaq-100 were all on course to advance 0.2% at the opening bell.

While the flow of corporate earnings releases has begun to ebb, investors were awaiting results from Dick’s Sporting Good before the market open, with U.S. inflation data also in focus.

Nonfarm payroll figures released Friday significantly undershot market expectations and fueled fears that the global economy is slowing, arriving against a backdrop of weak numbers out of Europe and Asia. Monday’s retail sales figures, which showed a rise in consumer spending in January, served to ease those concerns though.

Bets on rising inflation having slumped in recent weeks, and some strategists were skeptical that the U.S. economy will be able to strengthen.

“We don’t see inflation in the system,” said Manish Kabra, head of European equity quantitative strategy at Bank of America Merrill Lynch. Still that could benefit U.S. stocks, Mr. Kabra said, with tame inflation often supporting U.S. equities prices.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last down 0.1%. The yield on U.S. 10-year Treasurys rose to 2.667%, from 2.643% on Monday.

In commodities, Brent crude oil futures were up 0.5% at $66.89 a barrel, while copper futures were up 1% at $6,485 a metric ton, with traders citing optimism in broader markets and the falling dollar.

Source: Dow Jones

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