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Stocks rallied as President Donald Trump said the U.S. and China had reached “a very substantial phase one deal” during the second day of high-level trade talks. Treasuries tumbled with the dollar, while the pound surged on optimism for a Brexit agreement.

The S&P 500 Index climbed to within 1.5% of a record on speculation the accord will lay the groundwork for a broader deal that Presidents Trump and Xi Jinping could sign later this year. Apple Inc., which sells millions of iPhones in China, rose to an all-time high. The Stoxx Europe 600 Index jumped the most since January.

Crude oil surged following an explosion on an Iranian tanker and Pentagon plans to ramp up the deployment of U.S. forces to Saudi Arabia. Gilts tumbled and the pound was set for the biggest two-day gain in a decade as the EU’s chief negotiator recommended detailed talks with the U.K. can begin in earnest.

Investors embraced the progress on trade talks after conflicting headlines roiled markets this week, even if the accord falls short of a comprehensive agreement that would put an end to the trade war. Reports of a potential breakthrough on Brexit have also gone some way toward removing a persistent source of worry for markets.

“We could break through all-time highs if investors really perceive peace to this latest round,” said Diane Jaffee, senior portfolio manager at TCW, which oversees $200 billion. “Even though the market is rising today, there’s still a lot of skepticism embedded here. A lot, a lot, a lot.”

Elsewhere, equities rallied throughout Asia, with shares in Hong Kong getting an extra lift as protesters discussed scaling back vandalism ahead of demonstrations this weekend.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index added 1.7% as of 3:41 p.m. New York time.
  • The Stoxx Europe 600 Index surged 2.3%.
  • The MSCI Emerging Market Index climbed 1.8%.
  • The Shanghai Composite Index climbed 0.9%.

Currencies

  • The Bloomberg Dollar Spot Index dropped 0.4%.
  • The euro increased 0.3% to $1.104.
  • The British pound jumped 1.7% to $1.2659.
  • The offshore yuan climbed 0.4% to 7.0756 per dollar.
  • The Japanese yen fell 0.5% to 108.48 per dollar.

Bonds

  • The yield on 10-year Treasuries gained nine basis points to 1.75%.
  • Germany’s 10-year yield climbed three basis points to -0.45%.
  • Britain’s 10-year yield jumped 12 basis points to 0.70%.

Commodities

  • West Texas Intermediate crude gained 2.5% to $54.86 a barrel.
  • Gold decreased 0.8% to $1,482.69 an ounce.

With assistance from Sybilla Gross, Adam Haigh, Yakob Peterseil and Sophie Caronello.

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