Stocks Rebound as Trade Comments Ease Concerns: Markets Wrap

Stocks Rebound as Trade Comments Ease Concerns: Markets Wrap

Technology stocks led the S&P 500 and the Nasdaq higher on Tuesday, with USA stocks reclaiming ground lost to Monday's steep sell-off as investors took heart from a tonal shift in ongoing us trade negotiations with China.

Trump has promised to "make it up" to farmers hurt by Chinese tariffs against USA soybeans and other agricultural products with a bailout programme that was previously set at $12bn but may now "go higher". "Sentiment is also better as President Trump seems to be desiring a compromise", said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.

In the cash market in Asia at 07:01 GMT, Japan's Nikkei 225 Index is trading 21067.23, down 124.05 or -0.59 percent.

The MSCI Emerging Market Index decreased 0.1 per cent.

Another sign of investor jitters, the VIX index, which measures how much volatility the market expects in the future, spiked 28.1% on Monday.

Both sides had appeared close to finalising a deal in recent weeks before Trump last week hiked up tariffs to 25% from 10% on $200 billion worth of goods imported from China.

Iron ore futures are pointing to a rise of 0.3 per cent.

Also on Monday, Treasury Secretary Steven Mnuchin told CNBC the two countries are "still in negotiations".

Talking to CNBC, Greg Luken, CEO of Luken Investment Analytics said: "I think this is going to last for a while". Heavyweight exporters Caterpillar Inc. and Boeing Co. reversed around half of Monday's losses.

China on Monday boasted it will "never yield to external pressure" and is determined to protect its rights, said Geng Shuang, spokesperson for the Ministry of Foreign Affairs.

Of course, stocks are still lower than they were last week, following China's pledge to raise tariffs on USA goods. In addition to tariffs related to China, some investors are bracing for continued protectionism involving other countries after the Trump administration in April moved toward imposing tariffs on about $11 billion in imports from the European Union.

Other investments seen as safe harbors also dropped, such as USA government bonds. The USTR outlined a potential duty of up to 25% tariffs on China for goods with an annual trade value of roughly $300 billion.

One factor boosting confidence that US stocks can avoid 2018's sharp slide: the Federal Reserve's halt to interest-rate increases. Tensions also mounted in the Middle East over U.S. -Iran relations, adding to demand for haven assets. "Its stock markets could sustain its recovery if the government indicates it will continue to keep supporting the economy", Hirayama at SMBC Nikko Securities said. Mainland China led gains as speculation increased that Beijing will boost stimulus after data showed the economy lost steam.

"J.P. Morgan told its clients to prepare for the worst saying, "... the remaining hurdles are critical and hard.

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