GLOBAL MARKETS-World stocks zoom to 5-week highs on economic, stimulus hopes

Global stocks scaled five-week highs Monday on hopes that more government stimulus would come and that the world economy was on the mend, while the Chinese yuan retreated from a 17-month high after a policy move over the weekend. Investor optimism that Washington will work through talks that have repeatedly stalled to deliver another round of fiscal stimulus drove major U.S. stock indices to highs last seen in early September.

Hopes that the top Wall Street banks will announce a decent set of third-quarter earnings this week that show business was not as weak as feared also helped, while excitement over an expected debut of Apple Inc's latest iPhone on Tuesday buoyed technology stocks. Slugged by stronger investor demand for risk, the U.S. dollar was pinned near a three-week low and gold, another safe-haven asset, stayed below a three-week high. The U.S. bond market is closed on Monday for Columbus Day.

The cheer over the economic outlook and government stimulus did not boost oil prices, which dropped as investors focused on a boost in supply. The S&P 500 jumped 57 points, or 1.64%, to 3,534.22, within spitting distance of its record high of 3,580.84 struck on Sept. 2. The Dow Jones Industrial Average climbed 250 points, or 0.88%, to 28,837.52.

Shares in Apple surged 6.4% while those in Amazon rallied 4.8% ahead of its Prime Day shopping event on Oct. 13 and 14. That helped the Nasdaq Composite to stage its biggest one-day rally in a month, jumping 296 points, or 2.56%, to 11,876.26. "The market leaders are once again the tech names, supported by the fact that the economy continues to expand," said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management in New York.

MSCI's gauge of stocks across the globe climbed 1.43% to 592.96, a level not seen since Sept. 2, while European stocks rose 0.72% to 373.00. Bets that more U.S. stimulus was in the offing came in spite of indications that talks in Washington had stalled again, leading the Trump administration to call on Congress to pass a less ambitious coronavirus relief bill.

U.S. President Donald Trump on Friday had offered a $1.8 trillion coronavirus relief package after urging his team on Twitter to "go big" in negotiations with the Democrats to reach a deal. A sluggish U.S. dollar kept the U.S. dollar index down 0.07% at 93.045.

The Chinese yuan was off 0.8% after sliding as much as 272 pips overnight in Asia, after the central bank cut foreign exchange forward reserve requirements that effectively lowers the cost of shorting the yuan. The euro edged 0.1% lower to $1.1812 and the yen firmed 0.26% to 105.33 per dollar.

Gold edged 0.36% lower to $1,922.70 per ounce. Oil prices also slipped after a force majeure at Libya's largest oilfield lifted, a Norwegian strike affecting production ended and U.S. producers began restoring output after Hurricane Delta.

Brent crude fell $1.04, or 2.43%, to $41.81 a barrel and U.S. West Texas Intermediate lost $1.04, or 2.56%, to $39.56. JPMorgan and Citigroup will kick off the third-quarter earnings season on Tuesday, followed by Goldman Sachs, Bank of America and Wells Fargo on Wednesday and Morgan Stanley on Thursday.

Analyst data from Refinitiv showed Citigroup and Wells Fargo could report that net income has slid 60%, while JPMorgan and Bank of America are expected to post drops of 30%. Investment banks Goldman Sachs Group Inc and Morgan Stanley are expected to do better by announcing more modest declines of between 5% and 10%.