Wall Street has surged and the S&P 500 approached a record high after Washington rekindled trade talks with Beijing, boosting sentiment along with growing investor confidence that the Fed will cut interest rates this year. US President Donald Trump on Tuesday said he would meet with Chinese President Xi Jinping at the G20 summit later this month, and said talks between the two countries would restart after a recent lull. Trump’s statement pushed trade-sensitive industrials up 1.9 per cent and technology stocks gained 1.7 per cent – combining as the biggest boost to the S&P500 index.

The benchmark index was up 0.97 per cent to 2,917.75 at the close, and the Dow Jones Industrial average jumped 1.35 per cent to end at 26,465.54 points. The Nasdaq Composite was up 108 points, or 1.39 per cent, to 7,953.88 at the close.

Chip companies, which have a sizeable revenue exposure to China, led the rally in tech stocks, with the Philadelphia Semiconductor index surging 4.3 per cent. The US-China trade war and its impact on economic growth have investors increasingly expecting the Federal Reserve will cut rates to preserve the US economic expansion, which would be the longest on record this summer.

The Fed is widely expected to leave interest rates unchanged at its two-day policy meeting that ends Wednesday, while laying the foundation for a cut later this year. The Fed is scheduled to release its statement at 2pm local time on Wednesday, and Chairman Jerome Powell will hold a press conference shortly after.

Morning-Market-Note-Wednesday-19th-June