US stocks rise, dollar pares losses on trade talk hopes

Traders work on the floor at the New York Stock Exchange (NYSE) in New York May 10, 2019. ― Reuters pic
Traders work on the floor at the New York Stock Exchange (NYSE) in New York May 10, 2019. ― Reuters pic

NEW YORK, May 11 ― A gauge of world equity markets rebounded and the dollar pared losses yesterday after President Donald Trump said US-China trade talks were constructive, easing tensions that pushed stocks on Wall Street toward their biggest weekly loss since December.

The major US stock indexes swooned more than 1 per cent before rebounding from session lows, first on encouraging comments from Treasury Secretary Steven Mnuchin and then Trump's remarks that his relationship with President Xi remained strong.

Trump earlier said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators ended two days of talks aimed at salvaging an agreement aimed at ending a 10-month trade war.

Trump's remarks were made in a tweet and drove traders' optimism that could be seen in the Australian dollar, a proxy for Chinese economic prospects, which was 0.19 per cent higher.

US Treasury yields were little changed. Longer-dated yields hovered just off five-week lows, as trade tension worries simmered down even in the absence of a deal.

The United States early in the day increased tariffs on US$200 billion (RM831 billion) in Chinese goods to 25 per cent from 10 per cent, rattling markets on concerns about global growth as China is expected to retaliate.

In the short term, China needs a trade deal more than the US. But in the long term, the US needs it more than China, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York, who called it a “pretty good balance.”

“The market is getting that the statements (from Mnuchin and Trump) are more political than indicative of a change in strategy. Nothing has changed in terms of our investment thesis,” Pursche said.

MSCI's gauge of stock performance in 47 countries across the globe gained 0.32 per cent.

European shares rose on surging stock of industrial group Thyssenkrupp AG and robust defensive stocks. The pan-European STOXX 600 index rose 0.32 per cent.

Thyssenkrupp gained 28.2 per cent by short-covering on news it will list its successful elevators business and embark on a fresh restructuring.

London's main stock index, the FTSE 100, closed lower to cap its worst week since early December. Drugmaker AstraZeneca weighed, falling 2.3 per cent, after ambiguous results in test of an anemia treatment.

Despite the late-day rally the S&P 500 and Nasdaq posted their biggest weekly decline of the year, shedding 2.17 per cent and 3.03 per cent respectively.

The Dow Jones Industrial Average rose 114.01 points, or 0.44 per cent, to 25,942.37. The S&P 500 gained 10.68 points, or 0.37 per cent, to 2,881.4 and the Nasdaq Composite added 6.35 points, or 0.08 per cent, to 7,916.94.

The US dollar ticked up against the safe-haven Japanese yen as hopes rose for a US-China compromise on trade.

The dollar index fell 0.07 per cent, with the euro up 0.12 per cent to US$1.1234. The Japanese yen weakened 0.13 per cent versus the greenback at 109.95 per dollar.

US Treasury yields were little changed.

Benchmark 10-year notes fell 4/32 in price to push its yield up to 2.4707 per cent.

Oil prices closed the session mostly steady, ending the week slightly lower as the US-Sino trade tensions overshadowed tightening global supplies and expectations of rising US refining demand.

Brent crude oil settled up 23 cents at US$70.62 a barrel, but posted a weekly loss of 0.3 per cent.

US West Texas Intermediate (WTI) crude futures settled down 4 cents at US$61.66, with a weekly loss of 0.5 per cent.

Gold prices settled higher before Trump made his remarks and eased fears of a global economic slowdown that has lifted bullion prices for the week.

US gold futures settled up 0.2 per cent at US$1,287.40. ― Reuters