Global Stocks Regain Ground After Losses
July 12 2018 - 08:15AM
Dow Jones News
By Ben St. Clair
-- Stocks rebound from Wednesday's fall
-- China guides currency lower
-- Commodity futures rise
Stocks in Asia and Europe rose Thursday, a day after major
global indexes fell amid concerns over escalating trade tensions
and falling oil prices.
Futures pointed to a 0.6% opening gain for the S&P 500 and a
0.8% gain for the Dow Jones Industrial Average. The Stoxx Europe
600 was up 0.6% in afternoon trading, led by gains in travel and
leisure and media companies.
Shares of oil-and-gas companies were lower, even as Brent crude
oil was up 1.1% at $74.23 a barrel Thursday. The global benchmark
fell by almost 7% a day earlier on news that Libya would resume
exports, its sharpest daily decline since February 2016.
Stocks have continued to seesaw as investors react to
developments on trade and await second-quarter earnings, set to
come into full swing Friday with U.S. banks reporting results.
The Trump administration said Tuesday it would assess additional
tariffs on $200 billion on a variety of Chinese goods, including
bicycles, sound systems, refrigerators, pocketbooks, vacuum
cleaners, cosmetics, tools and seafood.
The news led to declines across global stocks and commodities,
compounded by the falling crude prices.
In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai
Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.
"We're at a situation where the markets have to react to the
uncertainty, " said Jim Smigiel, CIO of absolute return strategies
for SEI Investments.
But the market can be driven higher by strong economic data and
corporate earnings, said Mr. Smigiel, even if factoring in
different trade outcomes remains challenging.
"We think that those fundamentals will be enough to overcome
this steady stream of trade war rhetoric and action," he said.
U.S. economic data out Wednesday showed higher inflation. The
producer-price index, which measures prices that businesses receive
for their goods and services, rose 3.4% from the year before, the
largest annual increase since November 2011, the Labor Department
said Wednesday
The increase, which was higher than expected, raises the
probability of two additional rate rises from the Federal Reserve
this year. June data on consumer prices is out later Thursday.
Yields on 10-year Treasurys were up to 2.865% from 2.844% on
Wednesday. Yields rise as prices fall.
In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai
Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.
Hong Kong-listed shares in Chinese telecommunications equipment
maker ZTE soared 25% Thursday after the company cleared the last
major hurdle to lift U.S. sanctions. The U.S. Commerce Department
in April had banned U.S. companies from selling to ZTE as
punishment for the company's failure to honor an earlier U.S.
agreement over sales to North Korea and Iran.
Thursday's gains in Asian equities came as China guided the yuan
to its largest one-day drop against the U.S. dollar in a year and a
half. The central bank, which determines a daily dollar-yuan
exchange rate and allows the currency to trade within 2% of that
level, set the dollar's reference rate at 6.6726 yuan.
A weaker yuan makes Chinese exports more competitive and its
goods more valuable abroad.
The yuan has declined 2.5% against the dollar this year as the
greenback has strengthened. The WSJ Dollar Index, which measures
the greenback against a basket of other currencies, is up over 5%
in the past three months, as strong economic data and rising
interest rates have helped support it.
In commodities, copper futures rose 1.1% and aluminum futures
edged down 0.4% after earlier gains.
Elsewhere in markets, the Turkish lira climbed 1.4%, after steep
falls on Wednesday and Monday. Investors have reacted negatively
after President Recep Tayyip Erdogan appointed his son-in-law as
finance minister and put in place measures that could curb the
independence of Turkey's central bank.
(END) Dow Jones Newswires
July 12, 2018 08:00 ET (12:00 GMT)
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