Market Update & Important Indicators:
U.S. stocks stabilized Wednesday after escalating worries about U.S.-China trade relations triggered a selloff in the previous session. Investors this week have been more seriously considering the chance that the world's two largest economies could embark on a growth-hindering trade war, although many still expect the two countries to ultimately dial down their plans. Stocks, commodities and bond yields fell Tuesday after President Donald Trump called for his administration to identify $200 billion in Chinese goods for a fresh round of tariffs. The Dow Jones Industrial Average was down 0.2% in the last half-hour of trading. The S&P 500 was up 0.2%, and the tech-heavy Nasdaq Composite rose 0.9%. Some investors aren't sure that trade tensions will escalate, and major indexes have tended to stabilize following initial drops as the trade fights have escalated. The US gold price was down 0.5% to 1,267.60/oz.
The Stoxx Europe 600 index ended up 0.3% as investors "take a breather from trade wars," said IG analyst Joshua Mahony. Gains were limited, however, and may be short-lived. Sentiment is "still susceptible to escalating trade wars," with China expected to announce countermeasures after the U.S. targeted another $200 billion of Chinese goods. Germany's DAX ended up 0.1%, the U.K.'s FTSE 100 up 0.3%, though France's CAC 40 underperformed, falling 0.3%. Italy's FTSE MIB rose 0.2% and Spain's IBEX 35 by 0.3%. The U.K.'s Berkeley Holdings was the biggest faller among pan-European stocks, down 6% after announcing a cautious outlook.
Asian stocks regained ground Wednesday after escalating worries about U.S.-China trade relations triggered a steep selloff in the previous session. Japan's Nikkei Stock Average rose 1.2% and Hong Kong's Hang Seng rose 0.9%, after falling 1.8% and 2.8% respectively Tuesday. Shares of ZTE Corp., a company at the center of recent U.S.-China tensions, rose 19% in Hong Kong after falling 25% in the previous session. The Shanghai Composite Index edged up 0.3% after falling 3.8% in the previous session, narrowly avoiding a fall into bear market territory. South Korea's Kospi index rose for the first time in six sessions, as shares of Samsung BioLogics rose 10%.
Buoyed by the continued recovery by its major banks, Australia's stock benchmark continued its recent outperformance and, in the process, hit fresh 10-year highs Wednesday. Finishing near the day's best level, the S&P/ASX 200 climbed 1.2% to 6172.6, the highest finish since January 2008. The Big Four banks collectively contributed almost half of the index's gain as the financial sector jumped 2.3%. It's up 5.5% from Thursday's 19-month low. Telecom was the only sector which fell today, hit by Telstra's 4.8% pullback that erased the rest of last week's rebound. Investors today reacted to a sweeping restructuring that will eat into near-term earnings.
Base metal prices were mixed on the London Metal Exchange. The worst performer was the 3-month copper contract that fell 1.0% to 6,764/t. This was followed by lead and aluminium, that lost 0.5% and 0.2% respectively. Better performers were zinc that gained 0.1% to 3,037/t. Tin was stronger by 1.4% at 20,745/t. The leading performer was nickel that gained 2.2% to finish at 14,893/t. Nickel has enjoyed better times as traditional steel markets continue to strengthen and the lithium-ion battery-powered ‘clean energy revolution’ gains a global foothold.
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