Market Update & Important Indicators:
The Dow Jones Industrial Average and S&P 500 erased their losses Wednesday after minutes from the Federal Reserve's latest meeting showed the central bank plans to stay on a gradual path of rate increases even if inflation meets its target. The Dow industrials was up 0.2%, after earlier falling as much as 0.7%. The S&P 500 gained 0.3%, and the Nasdaq Composite added 0.2%. Worries about the Fed raising rates faster than expected have buoyed Treasury yields and the dollar lately and contributed to swings in stocks. Some analysts worry that higher borrowing costs will crimp future profit growth and a continued rise in bond yields will make stocks less attractive. Wednesday's minutes showed the Fed remains on track to raise rates in June as expected, but that the central bank plans to stay on its moderate path as it boosts rates to historically normal levels and unwinds its balance sheet. Stocks opened lower Wednesday as investors continued to assess a range of trade tensions and a drop in commodity prices. Investors were also parsing reports that President Donald Trump is weighing measures to cut European Union steel and aluminium exports to the U.S. by about 10%. The US gold price gained 0.2% to 1,293.00 (US$/oz).
The Stoxx Europe 600 index closed down 1.1% at 392.58, as concerns about trade tensions between the U.S. and China and Italian politics pulled European shares lower. Germany's DAX index fell 1.5%, led by falls in auto stocks and manufacturers. Italian stocks lost 1.3% as an anti-establishment government looked likely. France's CAC 40 lost 1.3%, the FTSE100 fell 1.1% and Spain's Ibex 35 ended down 1.1%.
Stocks in Asia mostly fell Wednesday, echoing losses in the U.S. as investors considered developments on trade and news that President Trump said he would scotch a planned summit with Kim Jong Un unless the North Korean leader first agreed to a list of unspecified conditions. Japan's Nikkei Stock Average shed 1.2% amid a steep climb in the yen while Hong Kong's Hang Seng fell 1.8% and Shanghai stocks fell 1.4%. Shares of Chinese auto makers were under pressure following news that China will reduce its import tariff on autos starting July in a concession to U.S. trade complaints.
Australian stocks fared better than most Asia Pacific stock markets today after yesterday's region-leading declines. But it wasn't enough to prevent the S&P/ASX 200 from logging a 5th-straight drop, the first since January. The index fell 0.2% to 6032.5 as the energy sector slid 2.3%, the most since early February, on regional weakness in the industry after a big run-up for oil-related shares. IT again underperformed while the health-care sector declined 0.9%. But REITs rose again, today by a stout 1.7% to nearly set a 2018 best.
Base metal prices were mixed for Tuesday on the London Metal Exchange. The aluminium price gained 0.1% to 2,262/t, while the price of tin gained 0.4% to 20,655/t. In contrast, the price of nickel lost 0.9% to 14,592/t and the price of zinc fell 0.8% to 3,025/t. The largest move was seen in the 3-month copper contract that lost 1.6% to 6,842/t. This is on the back of fading optimism that a China-U.S. trade standoff was at an end.
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