Wall St rebounds as U.S.-China trade rhetoric cools

Wall St rebounds as U.S.-China trade rhetoric cools

Wall St rebounds as U.S.-China trade rhetoric cools

A wave of selling swept through Wall Street Monday after China announced retaliatory tariffs on us goods with the Dow Jones Industrial Average tanking more than 600 points or 2.4 percent lower, and with more blood on the horizon set for the rest of the week.

The Dow Jones Industrial Average rose 54 points, or 0.2%, to 26,023, the S&P 500 rose 7 points, or 0.2%, to 2,891, while the Nasdaq Composite Index rose 22 points, or 0.3%, to 7,991.

The S&P 500 rose 13 points, or 0.5%, to 2,825. The Nikkei 225 index declined 0.7% Monday while the Shanghai Composite pulled back 1.2%.

On Monday, China's finance ministry said it planned to set import tariffs ranging from 5 per cent to 25 per cent on 5,140 US products on a target list worth about $60 billion.

Trade talks between the US and China concluded Friday with no agreement and with the USA increasing import tariffs on $200 billion of Chinese goods to 25% from 10%.

"As China's economic and geopolitical rise butts up against existing USA interests, eleventh hour negotiations and brinkmanship will be a recurring theme which the markets will learn to price in", they said.

Benchmark U.S. oil rose 74 cents to settle at $61.78 per barrel.

US Treasury yields fell to six-week lows, with 10-year yields falling below those of three-month bills, an inversion seen by many as a potential harbinger of recession. In addition to tariffs related to China, some investors are bracing for continued protectionism involving other countries after the Trump administration in April moved toward imposing tariffs on about $11 billion in imports from the European Union. He said, "When the time is right we will make a deal with China". 'Our working thesis is that we're going to be in for a period of volatility for most of the next month as we await the G-20 meeting'. Ten-year Treasury yields edged higher to 2.42 per cent. Commodities targeted by Chinese tariffs - including soybean and cotton futures - also rebounded.

USA equities fell sharply last week after Trump threatened to hike tariffs on China.

But Hellwig also feels the rollercoaster of the escalating trade war has had an effect on investor psychology. As it is, the United States remain in preparation for further tariffs for implementation.

China industrial production and retail sales are slated for Wednesday, the same day as USA retail sales and industrial production.

China, in turn, has proposed tariffs on more than 5,000 American products.

The idea that China would dump its $1.1 trillion of Treasuries to retaliate against US tariffs is often dismissed as improbable.

However, Trump on Tuesday said he had a "very good" dialogue with China and insisted talks between the world's two largest economies had not collapsed. It is not investment advice or a solution to buy or sell securities. You could lose all of your deposited funds. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg.

Wall Street closed deeply in the red on Monday.

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