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US stocks climb on Huawei reprieve; bonds mixed

May 21 2019 15:54
Yakob Peterseil and Vildana Hajric, Bloomberg

US stocks advanced on Tuesday following a mixed session in Asia as the trade-war driven back-and-forth that has dominated markets this month showed few signs of abating. The dollar strengthened while Treasuries slipped.

The S&P 500, Dow Jones Industrial Average and Nasdaq 100 indexes all jumped after the US decision to grant limited relief for consumers and carriers that do business with Huawei Technologies, a day after the White House’s moves against the Chinese telecom giant battered stocks. Tesla fell as Morgan Stanley analysts slashed their worse-case scenario for the share price to just $10.

Risk assets have been whipsawed in May as the world’s largest economies ratchet up both rhetoric and action on trade, with the latest phase focused on Huawei and its suppliers and customers. For all the turmoil a gauge of global stocks remains within 5% of an all-time high, while the S&P 500 is about 3% from a record.

Against that backdrop investors will be closely watching a slew of US data this week as well as Federal Reserve policy-meeting minutes due on Wednesday.

"We’re less than 5% off the highs that we just hit a couple of weeks ago. So I think that the market is assuming that we’re going to get something done here," Sarah Hunt, a portfolio manager at Alpine Woods in Purchase, New York, said on Bloomberg Television. "If you don’t, I think you have some real risk in the equity markets, but you also still have very low interest rates globally."

In Europe, technology shares powered the Stoxx 600 Index higher. Chinese equities had the strongest gains in the Asian session, while their Japanese peers ended lower. An advance for Samsung Electronics  helped bolster Korean shares, on bets it may benefit from Huawei’s need to shift away from American suppliers.

Elsewhere, the pound fluctuated ahead of UK Prime Minister Theresa May unveiling a new proposal for getting her Brexit deal through Parliament. Turkey’s lira stayed lower after the country’s central bank effectively lowered its main interest rate, undoing a limited tightening of policy.

Here are some notable events coming up:

The Fed minutes of its FOMC April 30-May 1 policy meeting will be released Wednesday. Counting of votes from the Indian general elections takes place Thursday as Prime Minister Narendra Modi attempts to secure a second term. ECB President Mario Draghi speaks in Frankfurt on Wednesday.

The European Parliament holds continent-wide elections May 23-26. On Thursday, the ECB publishes its account of the April monetary policy decision. Bank of England Governor Mark Carney’s planned appearance before Parliament Tuesday has been postponed.

And these are the main moves in markets:

Stocks

The S&P 500 Index gained 0.7% as of 09:36 New York time. The Stoxx Europe 600 Index gained 0.5%. The UK’s FTSE 100 Index increased 0.5%. The MSCI Emerging Market Index advanced 0.1%.

Currencies

The Bloomberg Dollar Spot Index increased 0.3% to the highest in five months. The euro fell 0.1% to $1.115, the weakest in more than three weeks. The British pound fell 0.1% to $1.2717. The Japanese yen decreased 0.5% to 110.56 per dollar.

Bonds

The yield on 10-year Treasuries advanced one basis point to 2.42%, the highest in more than a week. Germany’s 10-year yield gained one basis point to -0.08%, the highest in a week. Britain’s 10-year yield advanced two basis points to 1.071%.

Commodities

West Texas Intermediate crude fell 0.4% to $62.87 a barrel. Gold fell 0.5% to $1 270.86 an ounce, the weakest in almost three weeks.

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