Waterloo Region Record

U.S. stocks rise as Trump says China wants deal

President says China asked to ‘get back to the table’ for trade talks


U.S. stocks climbed Monday after President Trump said China wants to strike a trade deal, signaling a potential de-escalation in trade tensions between the world’s two largest economies.

The Dow Jones Industrial Average rose 250 points, or 1%, to 25879. The S&P 500 advanced 0.9%, and the Nasdaq Composite added 1.1%.

Stocks, bonds and currency markets have swung wildly over the past few days as traders have scrambled to make sense of the direction of U.S.-China trade talks. Stock futures had initially slid late Sunday after White House officials said Mr. Trump regretted not increasing tariffs on China further.

Some analysts said to view the latest flurry of trade-related comments with skepticism, noting both the U.S. and China have at several points suggested they were making progress on an agreement, only to back away from a deal. “We’ve been telling clients for some time that they should expect trade disputes to be part of the investing environmen­t for some time,” said Kathy Fisher, head of wealth and investment strategist at AB.

“Tweets and comments can sometimes suggest there’s something big about to happen, but we wouldn’t expect any durable resolution in the near term.”

U.S. Treasury yields bounced off their lows following an earlier rush to safety that pushed government-bond prices higher.

The yield on the two-year bonds was at 1.514% and the yield on the 10-year note was at 1.522%, according to Tradeweb, ending an earlier inversion of the two yields. Yields rise when prices fall.

Meanwhile, corporate news drove swings among individual stocks.

Bristol-Myers Squibb shares rose 2.9% after the U.S. pharmaceut­ical giant moved a step closer to securing regulatory approval for its proposed acquisitio­n of Celgene. Shares of Celgene advanced 2.9%.

Lyft jumped 3.5% after Guggenheim analysts raised their rating for the stock to “buy” from “neutral.”

In Europe, the Stoxx Europe 600 slipped less than 0.1%, amid low trading volumes around the region. The French CAC 40 rose almost 0.5%, while the German DAX gained about 0.4%. U.K. exchanges were closed for a holiday.

Asian stocks and global government bond yields fell earlier Monday as late-weekend comments from the U.S. on trade deepened concerns about global growth prospects.

China’s Shanghai Composite shed 1.2%.

“We no longer expect a partial resolution before spring 2020” as part of a base-case scenario, Holger Schmieding, chief economist at Berenberg Bank, said in a note to clients. “Of course, as both China and the U.S. remain ready to talk, a positive surprise in the form of a partial resolution of at least some tariff issues remains possible.”

Investors are losing faith in how both sides are approachin­g the trade war and whether a resolution could be reached soon, said Peter Atwater, a research analyst and adjunct lecturer at William & Mary in Williamsbu­rg, Va.

“Confidence requires perception­s of certainty and control,” he said. “Stock investors now have neither.”

Meanwhile, Hong Kong’s Hang Seng fell 1.9%, as pro-democracy protests turned violent after nearly two weeks of relative calm.

Separately, China’s currency weakened to a new multiyear low, weeks after Beijing first allowed it to trade beyond the symbolic level of 7 yuan per dollar.

The currency is both a flashpoint in relations with the U.S., and a means for China to make its exports more competitiv­e, helping offset the impact of U.S. import tariffs.

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