This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2019/05/10/business/global-markets.html

The article has changed 12 times. There is an RSS feed of changes available.

Version 9 Version 10
Wall Street is Whipsawed (Again) as U.S.-China Trade War Grows Wall Street Logs Its Worst Week This Year as Trade War Grows
(about 2 hours later)
Stocks on Wall Street swung between gains and losses on Friday, after the Trump administration imposed fresh tariffs on imports from China, escalating the trade war between the world’s largest economies. Stocks rose Friday, snapping a four-day losing streak and bucking recent concerns about the trade war even after the Trump administration imposed fresh tariffs on imports from China and trade negotiations between Washington and Beijing ended with no announced deal.
After an early drop of more than 1 percent, the S&P 500 recovered much of its losses and was more than half a percent higher late in the day. After dropping more than 1.5 percent early in the day, the S&P 500 clawed back those losses and had gained 0.4 percent by the close of trading.
The trading was characteristic of swings this week that have reflected growing uncertainty about the fate of a trade deal between the United States and China. Even as a Chinese delegation traveled to Washington for a round of talks, President Trump repeatedly signaled his growing impatience with the status of the discussions — with each comment from the president whipsawing the stock market. It was an inconclusive end to the market’s worst week of the year, a choppy series of trading sessions in which investors were riveted by presidential tweets that amounted to a running public commentary on the talks. For the week, the S&P 500 dropped 2.2 percent.
Early Friday, the administration raised tariffs to 25 percent from 10 percent on Chinese imports that are worth about $200 billion a year. President Trump said the increase came in response to Chinese officials attempting to “renegotiate” a pact aimed at calling a truce in the trade war. China said it would respond with unspecified countermeasures. “Because people don’t have conviction, the slightest bit of news is moving the market,” said JJ Kinahan, chief market strategist at TD Ameritrade. “This is the biggest story that’s hanging over it.”
Mr. Trump also said on Twitter that “there is absolutely no need to rush” on a trade deal, dampening hopes that an agreement would be reached quickly. Until now, the trade war has largely been an afterthought for investors in 2019. Stocks soared through the first four months of the year hitting record highs in April, as the Federal Reserve’s shift away from plans to raise interest rates reinvigorated risk-taking.
Later Friday, after the latest round of talks had ended, Steven Mnuchin, the Treasury secretary, told reporters that the discussions were “constructive,” and stock markets began to recover. But on Sunday, Wall Street’s assumption that China and the United States were moving closer to some sort of accord on trade was upended when President Trump threatened higher tariffs on China. More pronouncements on Twitter by the president pushed stocks around all week, alternatively raising or dashing hopes for a deal.
Concerns about the ongoing trade battle overshadowed the trading debut of Uber. The ride-sharing company priced its public offering Thursday, which valued it at more than $82 billion, but shares fell from the I.P.O. price in early trading Friday. Early Friday, the administration raised tariffs to 25 percent from 10 percent on Chinese imports that are worth about $200 billion a year. Mr. Trump said the increase came in response to Chinese officials trying to “renegotiate” a pact that was aimed at calling a truce in the trade war. China said it would respond with unspecified countermeasures.
Yields on the 10-year Treasury note declined again, suggesting that investors continued to move money into the safety of government bonds. The yield on the 10-year note hovered around 2.45 percent in morning trading. Prices for soybeans, a top American export to China, slipped again and hovered near their lowest levels of the last decade. Mr. Trump also said on Twitter that “there is absolutely no need to rush” on a trade deal, damping hopes that an agreement would be reached quickly. Then, later Friday, after the latest round of talks had ended, Steven Mnuchin, the Treasury secretary, told reporters that the discussions were “constructive,” and stock markets began to recover.
In Europe, Germany’s Dax rose 0.7 percent and the CAC 40 in France was 0.3 percent higher. The FTSE 100 in London fell 0.06 percent. Investors also seemed to take heart from comments from the president of the Federal Reserve Bank of Atlanta, Raphael Bostic, whose said on Friday that the central bank could cut interest rates if a trade fight begins to hurt to American economy.
Shares in China, which sometimes get a lift from state-run companies looking to buoy the market, rose sharply but gains elsewhere in Asia were more muted. “It’s reasonable to expect that the Fed might be in play more,” said Marvin Loh, global macro strategist at State Street, a money management firm. “The events that we’ve seen increase the odds that a cut is the next move.”
In China, the Shanghai Composite Index rose 3.1 percent, while the Shenzhen Composite Index rose 3.8 percent. Analysts say a rate cut from the Fed would be one of the few clear catalyst for higher stock prices in the near term, following the sharp run-up in share prices earlier this year.
The Hang Seng Index in Hong Kong rose 0.8 percent. In Japan, the Nikkei 225 index fell 0.3 percent after disappointing wage data there. South Korea’s Kospi index rose 0.3 percent. Even after the ugly week, investors continue to sit on healthy gains, with the S&P up nearly 15 percent in 2019. Many analysts also think that the early surge in stocks this year left the market ripe for a pullback, with the noisy return of trade tensions merely providing the trigger.
The economy remains relatively strong and corporate profits sturdy, analysts say, but the rise in the market has left stocks fully valued, and in need of a some sort of positive surprise to justify further gains and coax investors to buy.
“What’s the catalyst?” said Michael Purves, chief global strategist at the brokerage firm Weeden & Company. “Why wouldn’t you want to take some profits and sort of watch from the sidelines a little bit?”