Stock markets react positively to news of trade talks resuming

  • US stock markets are reacting positively to news of trade talks resuming
  • Asian stocks are trading higher today
  • USD/EUR reaches two-week high, GBP/USD approaching two-year low after Boris Johnson’s victory

Stock markets in the United States traded higher on Tuesday after news emerged that in-person trade discussions between the US and China are set to resume next week. Investors were also encouraged by a large number of mostly positive earnings reports.

The Dow Jones strengthened by 177.29 points, or 0.65 per cent, while the S&P 500 traded 20.44 points, or 0.68 per cent, higher.

Most Asian stocks followed their American counterparts’ example this morning, trading higher on the news of the trade talks resuming next week. The USD reached its highest level in two weeks against the Euro two days before this week’s ECB meeting.

Meanwhile, the Australian dollar weakened after a well-known economist predicted that the country’s central bank would reduce interest rates earlier than expected. 

In Sydney, Tokyo, Hong Kong and Shanghai, equity benchmarks all gained ground, but there was a contraction in Seoul. Futures on the S&P 500 remained fairly stable after that benchmark strengthened to above 3,000 yesterday. Crude oil prices increased for the fourth consecutive day.

In the UK, the GBP dropped to within a cent of its lowest level against the USD in well over two years after it was confirmed that Boris Johnson is set to become Theresa May’s successor as British Prime Minister.

Important upcoming events

The earnings season in the US is still in full swing, and companies set to release earnings reports this week include Alphabet, Amazon.com, Caterpillar, Unilever, Boeing and McDonald’s. On the other side of the pond, tomorrow will bring the ECB policy decision. Economists and analysts generally expect officials to signal their readiness for an interest rate cut and possibly wider stimulus measures. 

Stock markets falter after renewed trade war threats from Trump

  • Trump threatens to impose tariffs on $325bn more Chinese imports
  • S&P 500, Nasdaq Composite Index and Dow Jones Industrial Average subsequently trade lower
  • Materials and industrial sectors strengthened

Stock markets in the United States were dragged down yesterday by disappointing bank earnings and renewed threats from Donald Trump over the trade war with China. Not only did he say that a trade resolution could be “a long way off”, but he also threatened to impose tariffs on an extra $325bn worth of imports from China.

Chinese commerce minister Zhong Sham will soon join the negotiation team, which some observers expect could mean a tougher stance from China in these negotiations.

The S&P 500 dropped by 0.34 to close at 3,004.04. The Nasdaq Composite ended 0.43 down at 8,222.80, and the Dow Jones Industrial Average dropped by 0.09 to close at 27,335.63.

Wells Fargo dropped by up to 3 percent after its net interest income came in well below Wall Street estimates.

Goldman Sachs announced higher-than-expected equities sales and trading revenue. This boosted its stock price by 2 per cent. JPMorgan announced an 11 per cent increase in consumer and community bank revenues, which helped its EPS to exceed Wall Street estimates.

Meanwhile, meal kit delivery service Blue Apron’s share price exploded by up to 50 per cent.

The biggest gainers and losers on the S&P 500 were:

  • J.B. Hunt Transportation Services, up 5.79 per cent
  • Charles Schwab, up 3.50 per cent
  • Alaska Air Group, up 3.27 per cent
  • Western Digital, down 5.91 per cent
  • NRG Energy, down 4.66 per cent
  • First Republic Bank, down 4.35 per cent

The S&P 500’s technical index fell by nearly 0.9 per cent.

Energy stocks notched up the biggest losses, while the materials and industrial sectors gained between 0.2 per cent and 0.7 per cent. 

Global markets remain jittery amid conflicting signals from world economy

  • US stock markets rise slightly and USD surges while US Treasuries drop
  • Investors becoming reluctant to partake in bull run before Powell testimony
  • Stock markets move lower in Europe, China and Hong Kong

Stock markets in the United States closed somewhat higher on Tuesday after trading sideways for the biggest part of the day. Treasuries moved lower, but the USD reached its best level since the middle of last month.

Just before the close of trade, the S&P 500 suddenly started moving, with stronger tech stocks partly compensating for a drop in consumer staples and materials. The FAANG stocks, such as Facebook and Amazon, led gains in the equity benchmark.

Trading could remain volatile ahead of this week’s key testimony from Fed chairman Jerome Powell, with analysts assessing the likelihood of lower rates and other stimulus measures amid inconsistent signals from the world economy. Bond and stock investors are no longer so eager to take part in the bull run as a Fed rate cut has already been priced into current stock prices.

Fiera Capital Corp. portfolio manager and vice president Candice Bangsund said: “Powell is likely to walk a fine line between the hawks and doves in his testimony.”

In Europe, the STOXX 600 traded lower after BASF, the world’s biggest chemical firm, reduced its earnings forecast for this year because of international trade conflicts. In Japan, stock markets reversed earlier gains, while they were choppy in South Korea. China and Hong Kong reported small drops, while bonds strengthened in Italy. In Mexico, the peso lost value after the finance minister resigned.

In other economic news, bitcoin continued its bull run. The price of West Texas Intermediate crude oil increased, while the GBP lost value after a prediction by economists that the British economy would contract in Q2. The Hong Kong dollar, meanwhile, fell amid ongoing uncertainty over legislation that would enable extraditions to China.

Oil and USD lower as US stock markets gain

  • US stock markets gained on Tuesday
  • Bank stocks such as Wells Fargo, Bank of America, and Citigroup traded lower
  • Tech stocks strengthened on positive news from US-China talks

US stock markets strengthened yesterday to end a quiet session. The S&P 500 notched up its second record close in two days, despite the Trump government threatening to impose a new round of tariffs on European products.

Oil prices nosedived, with Brent crude oil and West Texas Intermediate crude oil falling by well over 3% each. This comes at a time when OPEC and other oil suppliers, including Russia, have just finalized plans to support oil prices.

The S&P 500 gained 0.3% to close at 2,973.07, while the Nasdaq Composite rose 0.2% to end the day at 8,109.09. The Dow Jones Industrial Average strengthened by 0.3% to close at 26,786.75.

The market was held back, however, by bank stocks losing value. Wells Fargo fell by more than 0.9%, as did Bank of America. Citigroup saw its stock price lose 0.4%. The two-year rate dropped to 1.76%, while the benchmark yield on 10-year Treasury Notes traded close to 1.97%. Meanwhile, the SPDR S&P ETF (KBE) nosedived by 1.4%.

Technology firms such as chip manufacturers, on the other hand, helped to lift the S&P 500 to a record high this week after the good news about China-US trade negotiations. The two countries’ leaders agreed not to impose fresh levies on one another’s products after they met privately during the G20 summit over the weekend.

The Dollar index, a measure of the American currency’s performance against a basket of international currencies, retreated on Tuesday. BK Asset Management forex strategist Kathy Lien said in a letter to clients: “After rising strongly on Monday, the U.S. dollar traded lower against all of the major currencies as G20 optimism gave way to fresh uncertainties.”