Stocks Open Higher as U.S.-China Trade Talks Commence
December 11 2018 - 10:06AM
Dow Jones News
By David Hodari
U.S. stocks climbed Tuesday as investors awaited developments in
trade talks between Washington and Beijing.
Both the S&P 500 and the Dow Jones Industrial Average rose
more than 1% in early trading in New York. The Dow Jones average
added 353 points, or 1.5%. Trade-exposed stocks like Boeing posted
opening gains.
The Stoxx Europe 600 was up 1.9% in afternoon trading, recouping
most of the losses that dragged the index to a two-year low Monday
after U.K. Prime Minister Theresa May postponed a crucial Brexit
vote in parliament.
Autos stocks also pushed higher. Ford shares rose 2.4% in
premarket trading, while the Stoxx 600's autos and parts sector
increased 2.7% following media reports that China's cabinet was
considering proposals to cut tariffs on U.S.-made cars to 15% from
40%.
Apple, up 1.2% in premarket trading, was among the tech stocks
set to climb, after facing pressure Monday on the news that a
Chinese court had ordered it to stop selling older iPhone
models.
The court ruling added another source of friction in the trade
skirmish between the world's two largest economies, as did the
recent arrest in Canada of Huawei Chief Financial Officer Meng
Wanzhou on behalf of U.S. authorities. Ms. Meng is accused of lying
to banks about Huawei's ties to a company that violated U.S.
sanctions on Iranian business.
The Trump and Xi administrations have been locked in a battle
over trade for months but the latest developments have marked a
shift in focus for some investors. While earlier rounds of tariffs
were more broad-based, the accusations and recriminations of recent
weeks have focused more sharply on U.S. allegations of
intellectual-property theft and cyber espionage on the part of
China, according to Cesar Perez Ruiz, chief investment officer at
Pictet Wealth Management.
"I don't call it a trade war, anymore. I call it a tech war,"
Mr. Perez Ruiz said.
Another source of early week pressure, uncertainty over the
U.K.'s route out of the European Union, also appeared to ease
Tuesday, with the British pound recovering 0.4% against the U.S.
dollar. Sterling still remained near the 18-month low it hit
Monday, though, while the yield on 10-year British government bonds
was 1.223%, having partially recovered after falling to 1.151% late
Monday. Yields go up when prices go down.
Still, the shock decision to pull the vote served to further
damage the reliability of U.K. assets for some investors.
"If you're a macro investor you're going to get blown out of the
water by events like yesterday's," said John Wraith, head of U.K.
rates strategy at UBS. "It makes investors incapable of trading
those markets with any conviction whatsoever, so you see a lot of
fund managers staying neutral and keeping their exposure to a
minimum."
Elsewhere, India's Nifty 50 index slumped 1.9% following the
resignation of the governor of its central bank.
Central banking policy was also a subject of focus in the U.S.,
where producer price figures, due out later in the day, will be
parsed for any signals as to the health of the American
economy.
Market participants widely expect the Federal Reserve to
announce an increase in interest rates when it meets next week,
with CME Group numbers giving a 75% probability of such an
outcome.
Any forward guidance out of the Fed will be closely scrutinized,
with some investors suggesting Chairman Jerome Powell has conveyed
mixed messages over recent months, after first suggesting rates
weren't close to neutral and then backtracking on those
remarks.
"I think he got a bit ahead of himself saying that we're not
close to neutral," said Mark Heppenstall, chief investment officer
at Penn Mutual Asset Management. "I think that was language we
weren't prepared for and it helped tip the market. Now I think
you'll see his language more focused on gradual patience."
In commodities, Brent crude oil prices were up 0.7% at $60.39 a
barrel, rallying on faltering Libyan production. Gold prices were
up 0.1% at $1,245.84 a troy ounce.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
December 11, 2018 09:51 ET (14:51 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Apr 2023 to Apr 2024