Market Update & Important Indicators:
U.S. stocks surged Monday, powered by shares of industrial companies, as concerns about a trade war between the U.S. and China eased. The Dow Jones Industrial Average jumped 1.2%, topping 25013 for the first time since March 16. The S&P 500 and Nasdaq Composite advanced 0.7% and 0.6%, respectively. Money managers said discussions between the U.S. and China this weekend have helped avert a trade war. Treasury Secretary Steven Mnuchin said the U.S. will suspend its efforts to apply tariffs to $150 billion in Chinese imports to the U.S., and that China would hold its threat to retaliate with tariffs on $50 billion in U.S. goods. To many investors, tariff threats stoked concerns that more countries world-wide would erect larger gates on trade. Stocks have rallied several times on the belief that trade tensions were easing, only to fall back down as investors took the opposite view. While the global economy remains robust and first-quarter earnings have been strong, stock markets have mostly traded sideways this year because many investors have started to fear that the pace of the expansion has already peaked. The US gold price was largely unchanged at 1,292.20 (US$/oz).
European shares rise 0.3% as an easing of trade tensions between the U.S. and China boosts the dollar against the euro, though Italian shares fall on political jitters. The Stoxx Europe 600 gains 1.2 points to 395.87 as the euro falls 0.1% against the U.S. currency. Milan's FTSE MIB drops 1.5% on concerns about a new populist government. France's CAC-40 advances 0.4%, while Spain's IBEX 35 falls 0.4. Germany's DAX is closed.
Asian stocks rose Monday as concerns about a trade war between the U.S. and China eased. All of China's indexes notched gains and Japan's Nikkei Stock Average closed up 0.3%. Money managers believe discussions between the U.S. and China this weekend have helped to avoid an all-out trade war, a positive development in their view. The U.S. is set to complete the procedural steps to apply tariffs on $50 billion of Chinese imports this week and has threatened to apply levies to a further $100 billion. While China had pledged to retaliate, it has now agreed to purchase a larger amount of American goods to help close the U.S. trade deficit.
A further 0.5% pullback in the materials sector was enough to keep Australia's stock benchmark from finishing higher, as most others in the region are poised to. The S&P/ASX 200 finished off 0.05% at 6084.5, a 3rd-straight slight decline as the market stalls in trying to top January's 10-year high. Rio Tinto fell 0.9%, more than doubling the drop of peer BHP. But energy hit another 3-year high in ticking up 0.1%. Financials and consumer stables also eased today, but consumer discretionary climbed.
Base metal prices were mixed for Monday on the London Metal Exchange. The 3-month copper contract gained 0.3% to 6,844/t, while the aluminium price gained 0.4% to 2,276/t. Nickel and tin lost 0.6% and 0.3% respectively, to finish at 14,608/t and 20,765/t. Lead was the largest mover and gained 3.6% to 2,398/t as Chinese speculators pile on long positions.
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