Stocks Surge After Trump Says He Talked With Xi
19 June 2019 - 2:20AM
Dow Jones News
By Alexander Osipovich and Nathan Allen
U.S. stocks rallied on Tuesday after President Donald Trump
signaled that trade talks with China had taken a turn for the
better.
The Dow Jones Industrial Average gained 360.48 points, or 1.4%,
in midday trading while the S&P 500 added 1.2% and the Nasdaq
Composite rose 1.7%.
Stocks opened moderately higher but jumped after Mr. Trump
tweeted that he and his Chinese counterpart Xi Jinping had a "very
good telephone conversation" and would meet later this month in
Japan. The threat of a mounting trade conflict with China has
weighed on U.S. economic data and prompted uncertainty among
investors.
"It looks like the markets are getting excited about the
potential for some sort of agreement between Trump and China," said
Charlie Ripley, a strategist at Allianz Investment Management.
Technology stocks with significant Chinese exposure were among
the biggest gainers. Apple climbed 2.6%, while chip makers Intel
and NVIDIA were up 3.5% and 6%, respectively.
Facebook's shares rose 0.9% after the company formally announced
a plan to launch its own cryptocurrency.
Oil futures surged 4.1% to $54.04 a barrel with the easing trade
tensions, lifting energy stocks. Chevron was up 1.1% and Exxon
Mobil rose 1%.
Investors are also awaiting signals from the Federal Reserve on
whether it was leaning toward cutting interest rates at the end of
its two-day meeting on Wednesday.
Federal-funds futures indicated on Tuesday that investors saw a
nearly 90% chance of a rate cut in July, according to CME Group.
But strategists at Goldman Sachs, JPMorgan Chase & Co. and
other banks warned that expectations of a summer rate cut were
overblown.
Earlier, European stocks posted strong gains after European
Central Bank President Mario Draghi signaled the bank could roll
out fresh stimulus as soon as its next policy meeting in July.
Germany's DAX rose 2.2%, while the FTSE 100 climbed 1.2%. The
yield on 10-year German bunds declined to minus 0.324%--near record
lows -- after Mr. Draghi said additional monetary stimulus would be
required if eurozone inflation doesn't improve. Yields move in the
opposite direction to prices.
Mr. Draghi's dovishness may help set the stage for a Fed rate
cut, said Jason Pride, chief investment officer of private wealth
at Glenmede. "It could give cover to the Fed for cutting rates
0.25% or 0.50% over the next six months," he said.
U.S. bond yields fell, pulled down by Mr. Draghi's comments and
expectations of a Fed rate cut. The yield on the benchmark 10-year
Treasury was recently at 2.041%.
The euro fell 0.25% against the dollar in response to the
European Central Bank chief's speech. Mr. Trump tweeted to say Mr.
Draghi's speech had weakened the euro, "making it unfairly easier
for them to compete against USA."
Most Asian markets posted modest gains, with Hong Kong's Hang
Seng Index rising 1%. Korea's Kospi rose 0.4%, but Japan's Nikkei
225 fell 0.7%.
The WSJ dollar index, which measures the currency against a
basket of its peers, was little changed. Gold futures rose 0.6% to
1351.50 a troy ounce.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
June 18, 2019 12:05 ET (16:05 GMT)
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