Eyes on Wall Street during U.S.-China tariff war

Lloyd Doyle
May 15, 2019

The falling price has put pressure on US farmers.

Wall Street is rebounding after the worst day in the U.S. stock market in months.

Trump on Monday warned China against retaliation on tariffs in a series of early morning tweets Monday and insisted there was "no reason" for USA consumers to absorb their costs.

Uber's shares rose another 6.4 per cent in after-the bell trading after a United States labour agency said it had concluded that the company's drivers were independent contractors, not employees.

European shares were expected to take their lead from US futures.

On Monday, China said it would impose higher tariffs on a range of United States goods, including frozen vegetables and liquefied natural gas, striking back in its trade war with Washington after Trump warned it not to. Shares fell in Taiwan and Southeast Asia. The index had earlier fallen as much as 1.25% to its lowest since January 30.

North American markets rallied Tuesday after enduring a deep hit to start the week due to the escalating U.S. "But the hopes for that are a bit misplaced now", he said. Caterpillar shares gained 1.7%.

"An eventual agreement still seems the most likely outcome, although political miscalculation is a rising risk", said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute.

The U.S. imported nearly $540 billion in goods from China in 2018, while exporting $120 billion.

Japan's Nikkei stock index fell to its lowest since mid-February.

The Dow Jones Industrial Average rose 207.06 points, or 0.82%, to 25,532.05, the S&P 500 gained 22.54 points, or 0.80%, to 2,834.41, and the Nasdaq Composite added 87.47 points, or 1.14%, to 7,734.49. "That weighs on the global economy and could then weigh on the US economy".

Other similar comments were made by US President Trump and his administration throughout most of the first 4 months this year which helped fuel the sharp rebound in market optimism and equity prices. They rose back above shorter-dated three-month bill yields after the yield curve inverted on Monday for the second time in less than a week. But data from CME Group continued to show a more than 70% chance of the Fed cutting rates by the end of 2019.

Those hopes are now being dashed and replaced by concerns that the trade war could crimp what is otherwise a mostly healthy economy. "There is no recession in sight this year", said the NFIB.

"Their (sic) is no reason for the US consumer to pay the Tariffs, which take effect on China today", Trump tweeted. But most analysts downplayed such a possibility. Too expensive to buy in China. "So I doubt they'll try to sell Treasuries".

Except for the Japanese Yen, most Asian currencies are now weaker against the US Dollar. China main market index lost 0.7 percent while Tokyo's benchmark declined 0.6%.

That still compares favorably with a 20% fall between Oct.3 and Christmas of past year, but it has traders again talking about the end of a decade-long rally that dates back to the aftermath of the 2008 financial crash.

In another sign trade tensions are hurting the economic outlook, Germany's ZEW institute said investors' mood had deteriorated unexpectedly in May. Tariffs "are taxes on American consumers that result in higher prices, lower sales, and lost jobs", he added.

US crude was 0.3% higher at $61.23 per barrel while Brent crude gained 0.4% to $70.49 per barrel. Spot gold edged lower to $1,297.12 per ounce.

Other reports by Iphone Fresh

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