Wall St climbs on easing US-China trade tensions

NEW YORK: Wall Street indexes rose yesterday, helped by gains in technology stocks after President Donald Trump softened his stance on Chinese technology company ZTE Corp, signaling easing US-China trade tensions.

Trump on Sunday pledged to help ZTE “get back into business, fast” nearly a month after the US Commerce Department banned American companies from selling to the firm for violating an agreement. Trump’s comments came ahead of trade talks between Chinese Vice Premier Liu He and US officials this week to resolve escalating trade disputes and drove big gains in the shares of US suppliers to ZTE.

Optical components maker Acacia Communications jumped 16.1 percent, while Oclaro and Lumentum Holdings rose 5.8 percent and 3.6 percent, respectively. “Some of the headlines point to signs that Trump might be watering down his tough talks on trade,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. Also helping the mood was news that

China had resumed its review of chipmaker Qualcomm’s proposed $44 billion takeover of NXP Semiconductors. NXP surged 10.3 percent and Qualcomm 3.3 percent. The Philadelphia semiconductor index was up 1.9 percent. At 9:55 am ET, the Dow Jones Industrial Average was up 120.76 points, or 0.49 percent, at 24,951.93, the S&P 500 was up 12.45 points, or 0.46 percent, at 2,740.17 and the Nasdaq Composite was up 43.40 points, or 0.59 percent, at 7,446.28.

The indexes posted solid gains last week, helped by a surge in oil prices, easing inflation fears and Apple’s rally that took the iPhone maker close to $1 trillion in market capitalization.

The S&P 500 and the Dow Jones Industrial Average were trading above their 100-day moving averages, a key technical level that many traders believe is a sign that markets could gain further. “It looks like the markets want to move up, and there seems to be a rosier outlook for geopolitics especially North Korea,” Cardillo said. US Secretary of State Mike Pompeo said on Sunday that Washington would agree to lift sanctions on North Korea if the country agrees to completely dismantle its nuclear weapons program. Nine of the 11 major S&P sectors were higher, with technology and energy sectors leading the gains.

Exxon rose 1.1 percent after Citigroup raised its price target on the stock. The biggest decliner was Xerox, which tumbled 7.9 percent after the US photocopier giant scrapped a planned $6.1 billion deal with Fujifilm Holdings. Advancing issues outnumbered

decliners by a 2.39-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 2.04-to-1 ratio on the Nasdaq. The S&P index recorded 21 new 52-week highs and two new lows, while the Nasdaq recorded 73 new highs and 15 new lows. Stocks in Asia were also upbeat. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5 percent, while Japan’s Nikkei also tacked on 0.5 percent.

Chinese shares came off the day’s highs but still ended in positive territory after Trump’s comments on ZTE Corp ,, which JPMorgan analysts said was “a significant positive”. Shanghai’s SSE Composite index rose 0.3 percent while the blue-chip rallied 0.9 percent. Hong Kong’s Hang Seng index climbed 1.4 percent.

Elsewhere in Asia, the Malaysian ringgit recovered losses after sliding 1 percent to a four-month trough against the dollar in the first onshore trade since a shock election upset last week. Malaysian stocks sank as much as 2.7 percent at one point but ended 0.2 percent higher. Veteran Mahathir Mohamad, 92, came out of political retirement to lead the opposition Pakatan Harapan (Alliance of Hope) to a stunning victory, defeating prime minister Najib Razak, a former protege whom he had accused of corruption.

Some investors were concerned that populist promises such as repealing an unpopular goods and services tax and restoring a petrol subsidy could undermine the country’s finances.

But some analysts believe Mahathir’s proposals could be positive for the economy. “The repeal of GST, while only marginally negative for the fiscal deficit, will be a boon for consumers, who have been upset that they bear the burden of poor fiscal management and came out to vote against the establishment,” said Trinh Nguyen, senior economist at Natixis.

Oil and Iran

While tensions in the Korean peninsula have eased, US plans to reintroduce sanctions against Iran have stoked anxiety in the Middle East. Iran pumps about 4 percent of the world’s oil, and the latest development has sent oil prices to near multiyear highs. Citi analyst Mark Schofield said rising oil prices risk causing ‘stagflation’, which could create a particularly “hostile environment” for risk assets.

Yesterday, US crude traded flat at $70.71 a barrel and Brent was up at $77.23, clawing back previous losses after a relentless rise in US drilling activity pointed to increased output. The United States threatened on Sunday to impose sanctions on European companies that do business with Iran, as the remaining participants in the Iran nuclear accord stiffened their resolve to keep that agreement operational. In currencies, the dollar dipped 0.2 percent to 92.33 against a basket of major currencies and was set for its fourth straight day of losses. — Reuters