USA stocks extend rebound from trade-driven rout

Galtero Lara
May 15, 2019

Also, Trump said he had a feeling talks with China will be "very successful" and that he meant to meet his Chinese counterpart Xi Jinping at next month's G20 summit. Buying of longer-dated Treasuries likely stemmed from hedge funds covering short positions in the wake of renewed US-China trade tension, according to data from Commodity Futures Trading Commission released late Friday. In addition to more tariffs, traders are concerned China, the largest foreign U.S. creditor, may dump Treasuries to counter the Trump administration's hardening trade stance.

US Treasury yields fell to six-week lows on Monday as investors piled into low-risk assets after China announced plans to impose additional tariffs on US-made goods in retaliation for a US increase in duties on Chinese imports on Friday.

And here are the main market moves: Stocks The S&P 500 Index rose 1.3 per centas of 3.10pm NY time. Long considered a risk to the US economy, this CNBC article takes a detailed look at what would happen in China engaged in this "nuclear" option. "And you're also seeing President Trump confirmed a meeting with President Xi during next month's G-20 summit, which provides some optimism that despite the increase in tariffs, negotiations are still ongoing". Here are some notable events coming up this week: Earnings this week include Alibaba, Tencent, Cisco, Nvidia.China industrial production and retail sales are slated for Wednesday, the same day as USA retail sales and industrial production.Bank of Indonesia has an interest rate decision on Thursday.Australian unemployment is out on Thursday.

Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin make appearances.

Even without China, U.S. paper is still very much in demand.

So, if Beijing were to start dumping treasuries, flooding the open market, interest rates for the bonds they were dumping might increase, but just temporarily, because to sell they'd have to have willing buyers.

Australian unemployment is out on Thursday. Last year, China's Treasuries holdings fell by about 5%, second in scale only to the 2016 reduction.

West Texas Intermediate fell 0.6 per cent to US$61.27 a barrel.

The MSCI Emerging Market Index decreased 0.1 per cent.

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London stocks gained 0.9 percent in late morning deals. while Frankfurt won 0.5 percent and Paris rallied 1.1 percent in early afternoon trade.

The MSCI Asia Pacific Index sank 0.7 per cent.

On Monday, the Dow Jones Industrial Average fell 612.77 points, or 2.36%, to 25,329.6, the S&P 500 lost 68.52 points, or 2.38%, to 2,812.88 and the Nasdaq Composite dropped 250.57 points, or 3.17%, to 7,666.37.

The yen rose 0.3 per cent to 109.61 per U.S. dollar.

The euro bought $1.1203, little changed.

The Aussie lost 0.3 per cent to 69.81 U.S. cents.

Germany's 10-year yield dipped two basis points to -0.07%. The benchmark 10-year Treasury yields 2.41%, compared with 2.68% at the end of December.

Spot gold added 0.9% to $1,297.60 an ounce.

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