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Trade war: Wall Street rallies as Trump promises deal with China 'when the time is right' - business live Wall Street rallies as Trump promises China trade deal 'when the time is right' -as it happened
(32 minutes later)
Finally....Wall Street has bounced back from Meltdown Monday with a Turnaround Tuesday.
Although the rally did fade in late trading, stocks have still recovered a chunk of yesterday’s rout (the worst since January).
Tech stocks such as Apple and IBM continued to lead the rally, with industrial stocks also in demand.
Here’s the closing prices:
Dow Jones industrial average: up 209 points or 0.83% at 25,534
S&P 500: Up 22 points or 0.8% at 2,834
Nasdaq: Up 86 points or 1% at 7,733
Hopes that the US and China haven’t irretrievably fallen out helped shares to rally - Donald Trump’s tweets can take some of the credit.
There was probably also some bargain hunting by investors, as stocks hit seven-week lows yesterday. But with many asset managers fearing a crash (see earlier), the rally may not have strong foundations.
Plus, this story has plenty more twists; Beijing was clear today that it will not be bullied, telling reporters that the US mustn’t underestimate its determination.
So a compromise will need plenty of work. Plus, Trump can’t risk signing up to a bad deal ahead of next year’s elections, so there’s plenty of incentive for the White House to play tough.
We’ll be back tomorrow for more action. Goodnight! GW
Apple is particularly vulnerable to an escalating US-China trade war, analysts say.Apple is particularly vulnerable to an escalating US-China trade war, analysts say.
Mobile phones made in China aren’t currently subject to the new US tariffs, but they are on the list of $300bn of imports which could soon be hit.Mobile phones made in China aren’t currently subject to the new US tariffs, but they are on the list of $300bn of imports which could soon be hit.
Morgan Stanley analyst Katy Huberty has calculated that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could decide not to pass it on-- which would wipe 23% off its earnings per share.Morgan Stanley analyst Katy Huberty has calculated that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS. Or Apple could decide not to pass it on-- which would wipe 23% off its earnings per share.
Huberty wrote:Huberty wrote:
“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China.”“Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China.”
With an hour’s trading to go, the Dow is up 310 points at 25,635 points.With an hour’s trading to go, the Dow is up 310 points at 25,635 points.
That would be its best day since the start of April.That would be its best day since the start of April.
After being shunned yesterday, technology shares are back in investors’ good books.After being shunned yesterday, technology shares are back in investors’ good books.
IBM has gained 2%, Apple is 1.8% higher and Cisco is up 1.7% in late trading..IBM has gained 2%, Apple is 1.8% higher and Cisco is up 1.7% in late trading..
Tech stocks are obvious casualties from a US-China trade war (as so many US companies use Chinese factories). Today’s warmer comments from the two sides could be good news for the sector.Tech stocks are obvious casualties from a US-China trade war (as so many US companies use Chinese factories). Today’s warmer comments from the two sides could be good news for the sector.
But analysts are still predicting more volatility.But analysts are still predicting more volatility.
Jerry Lucas, senior trading strategist at UBS Global Wealth Management, told Reuters:Jerry Lucas, senior trading strategist at UBS Global Wealth Management, told Reuters:
“We’re seeing trade optimism from semi-market friendly tweets from Trump. If we’re still talking then it means that a deal could be done soon.“We’re seeing trade optimism from semi-market friendly tweets from Trump. If we’re still talking then it means that a deal could be done soon.
“We’re in a highly uncertain period right now, and the market is going to oscillate between good and bad days.”“We’re in a highly uncertain period right now, and the market is going to oscillate between good and bad days.”
Wall Street traders are also taking comfort from reassuring comments from China’s government today.Wall Street traders are also taking comfort from reassuring comments from China’s government today.
While many Americans were sleeping, Chinese Foreign Ministry spokesman Geng Shuang told reporters in Beijing that negotiations hadn’t broken down.While many Americans were sleeping, Chinese Foreign Ministry spokesman Geng Shuang told reporters in Beijing that negotiations hadn’t broken down.
Geng explained:Geng explained:
“My understanding is that China and the United States have agreed to continue pursuing relevant discussions. As for how they are pursued, I think that hinges upon further consultations between the two sides,”“My understanding is that China and the United States have agreed to continue pursuing relevant discussions. As for how they are pursued, I think that hinges upon further consultations between the two sides,”
But.... China still won’t take all the blame for the sharp deterioration in relations last week.But.... China still won’t take all the blame for the sharp deterioration in relations last week.
Geng insisted that China had shown goodwill in the talks -- by sending a delegation to Washington last week even though the US was raising tariffs on some Chinese goods.Geng insisted that China had shown goodwill in the talks -- by sending a delegation to Washington last week even though the US was raising tariffs on some Chinese goods.
What goes down, must come up again!What goes down, must come up again!
Wall Street is rallying strongly this afternoon, as investors cling onto Donald Trump’s more positive, conciliatory comments today.Wall Street is rallying strongly this afternoon, as investors cling onto Donald Trump’s more positive, conciliatory comments today.
The Dow Jones Industrial Average has jumped by 311 points to 25,626, a gain of 1.2% that claws back half of Monday’s slump.The Dow Jones Industrial Average has jumped by 311 points to 25,626, a gain of 1.2% that claws back half of Monday’s slump.
With the S&P 500 up 1.2%, and the Nasdaq 1.5% higher, there’s a more positive mood in New York.With the S&P 500 up 1.2%, and the Nasdaq 1.5% higher, there’s a more positive mood in New York.
Commodity prices are also holding their earlier gains.Commodity prices are also holding their earlier gains.
Trump’s pledge that a deal with China will come when ‘the time is right’ is soothing frazzled nerves. Given the disruption that a full-blown trade war would bring, surely both sides will compromise - perhaps as soon as the G20 meeting next month?Trump’s pledge that a deal with China will come when ‘the time is right’ is soothing frazzled nerves. Given the disruption that a full-blown trade war would bring, surely both sides will compromise - perhaps as soon as the G20 meeting next month?
Ryan Nauman, market strategist at Informa Financial Intelligence, told Bloomberg that yesterday’s rout may have created some bargains.Ryan Nauman, market strategist at Informa Financial Intelligence, told Bloomberg that yesterday’s rout may have created some bargains.
Investors are looking for opportunities to get into this market, and so far in 2019 there really haven’t been any ‘buy the dip’ opportunities other than last week.Investors are looking for opportunities to get into this market, and so far in 2019 there really haven’t been any ‘buy the dip’ opportunities other than last week.
And you’re also seeing President Trump confirmed a meeting with President Xi during next month’s G-20 summit, which provides some optimism that despite the increase in tariffs, negotiations are still ongoing.”And you’re also seeing President Trump confirmed a meeting with President Xi during next month’s G-20 summit, which provides some optimism that despite the increase in tariffs, negotiations are still ongoing.”
Veteran traders, though, may remember that what goes up often has a habit of coming down again when a crisis flares up.Veteran traders, though, may remember that what goes up often has a habit of coming down again when a crisis flares up.
Ironically, today’s calmer financial markets mean there’s more chance the trade war continues.Ironically, today’s calmer financial markets mean there’s more chance the trade war continues.
It might take a major crash for both sides to end the dispute, argues Stefan Legge of the University of St Gallen.It might take a major crash for both sides to end the dispute, argues Stefan Legge of the University of St Gallen.
Here’s his take:Here’s his take:
The US-China trade dispute will last and likely be extended beyond the realm of trade. The two nations are engaged in geopolitical rivalry and neither side is going to cave in. The Chinese response to the recent tariff hike was predicted – President Xi cannot lose face in this dispute.The US-China trade dispute will last and likely be extended beyond the realm of trade. The two nations are engaged in geopolitical rivalry and neither side is going to cave in. The Chinese response to the recent tariff hike was predicted – President Xi cannot lose face in this dispute.
What then can de-escalate the trade war? In late 2018 and early 2019, both sides agreed to a truce when stock markets tumbled for a while both in China and the US.What then can de-escalate the trade war? In late 2018 and early 2019, both sides agreed to a truce when stock markets tumbled for a while both in China and the US.
However, the market response to the recent developments is rather mild. Either businesses do not expect a further escalation, have priced in the distortion, or companies can live with more trade frictions.However, the market response to the recent developments is rather mild. Either businesses do not expect a further escalation, have priced in the distortion, or companies can live with more trade frictions.
The latter point makes sense to the extent that the tariffs are but an addition to existing trade barriers. It is not like international trade – commerce between the US and China – was free of barriers and distortions before the US President started imposing tariffs. As the Global Trade Alert documents on a regular basis: most shipments were already subject to significant distortions prior to the US-China trade war.The latter point makes sense to the extent that the tariffs are but an addition to existing trade barriers. It is not like international trade – commerce between the US and China – was free of barriers and distortions before the US President started imposing tariffs. As the Global Trade Alert documents on a regular basis: most shipments were already subject to significant distortions prior to the US-China trade war.
If, however, the recent trade policies indeed have a significant negative impact on both economies, I would expect two things to happen more than I would expect a de-escalation: First, both countries will increase subsidies to affected businesses, as they already announced. Second, both administrations will attempt to blame the geopolitical rival – or individual firms – for negative outcomes.If, however, the recent trade policies indeed have a significant negative impact on both economies, I would expect two things to happen more than I would expect a de-escalation: First, both countries will increase subsidies to affected businesses, as they already announced. Second, both administrations will attempt to blame the geopolitical rival – or individual firms – for negative outcomes.
When prices go up in the US as a result of the tariffs – and they have in the past and will now, no question – President Trump will blame the companies for raising prices. Politically, this could work to his favor in the 2020 presidential election. The question is whether the blame game can be managed successfully by Donald Trump and I would not underestimate his skills in this regard.When prices go up in the US as a result of the tariffs – and they have in the past and will now, no question – President Trump will blame the companies for raising prices. Politically, this could work to his favor in the 2020 presidential election. The question is whether the blame game can be managed successfully by Donald Trump and I would not underestimate his skills in this regard.
Bottom line: Unless there will be a severe negative reaction by the market to the trade dispute, the escalation is likely to continue.Bottom line: Unless there will be a severe negative reaction by the market to the trade dispute, the escalation is likely to continue.
Britain’s FTSE 100 index has closed 77 points higher at 7241, up 1%.Britain’s FTSE 100 index has closed 77 points higher at 7241, up 1%.
Donald Trump has downgraded the trade war to a ‘little squabble’.Donald Trump has downgraded the trade war to a ‘little squabble’.
Speaking to the press in Washington, the president also predicts that the dispute will end extremely well.Speaking to the press in Washington, the president also predicts that the dispute will end extremely well.
Sounds like he’s trying to cool the situation, after Monday’s market mayhem....Sounds like he’s trying to cool the situation, after Monday’s market mayhem....
Despite trade war with China, Pres says he has a good relationship with China's Pres Xi. Says US is in a good position in the trade dispute. Speaking to reporters on leaving the WH for Louisiana daytrip, he says the US economy is fantastic, and China's is not so good.Despite trade war with China, Pres says he has a good relationship with China's Pres Xi. Says US is in a good position in the trade dispute. Speaking to reporters on leaving the WH for Louisiana daytrip, he says the US economy is fantastic, and China's is not so good.
Pres refers to US trade war with China as "a little squabble." Says it should have been resolved by his predecessors. But still thinks "it will turn out extremely well," because the US is in a strong position." pic.twitter.com/Ucrmrja5nJPres refers to US trade war with China as "a little squabble." Says it should have been resolved by his predecessors. But still thinks "it will turn out extremely well," because the US is in a strong position." pic.twitter.com/Ucrmrja5nJ
Back on Wall Street, every sector of the Dow Jones industrial average is up.Back on Wall Street, every sector of the Dow Jones industrial average is up.
That’s a change from yesterday, when everything was taking a dive.That’s a change from yesterday, when everything was taking a dive.
Donald Trump’s pledge to reach a deal with China, eventually, seems to be helping.Donald Trump’s pledge to reach a deal with China, eventually, seems to be helping.
Consumer focused companies such as Coca-Cola (+2.5%) and Visa (+2.2%) are leading the rally followed by industrial and technology stocks including Cisco (1.95%) and Boeing (+1.5%)Consumer focused companies such as Coca-Cola (+2.5%) and Visa (+2.2%) are leading the rally followed by industrial and technology stocks including Cisco (1.95%) and Boeing (+1.5%)
Here’s the latest prices:Here’s the latest prices:
Dow: +193 points or 0.77% at 25,518Dow: +193 points or 0.77% at 25,518
S&P 500: + 25 points or 0.9% at 2,837S&P 500: + 25 points or 0.9% at 2,837
Nasdaq: + 78 points or 1% at 7,726Nasdaq: + 78 points or 1% at 7,726
Britain’s second largest steel firm has asked the government for emergency funding to prevent it from collapse, blaming “Brexit-related issues”.Britain’s second largest steel firm has asked the government for emergency funding to prevent it from collapse, blaming “Brexit-related issues”.
British Steel, which employs 4,500 people at its Scunthorpe steelworks and several sister sites, is understood to be in talks with its lenders and the government over a £75m rescue package.British Steel, which employs 4,500 people at its Scunthorpe steelworks and several sister sites, is understood to be in talks with its lenders and the government over a £75m rescue package.
A spokesperson for the Department of Business, Energy and Industrial Strategy said they could not comment on speculation about injecting fresh funds.A spokesperson for the Department of Business, Energy and Industrial Strategy said they could not comment on speculation about injecting fresh funds.
But a British Steel spokesperson said:But a British Steel spokesperson said:
“As we have previously commented, the uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.“As we have previously commented, the uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.
BEIS refusing to comment on British Steel asking for government to stump up cash as part of a £75m rescue package, saying it's just speculation.Meanwhile British Steel says "discussions are continuing about a package of additional support".BEIS refusing to comment on British Steel asking for government to stump up cash as part of a £75m rescue package, saying it's just speculation.Meanwhile British Steel says "discussions are continuing about a package of additional support".
This comes just days after the government lent British Steel £120m to cover its bill for an EU climate credits scheme.This comes just days after the government lent British Steel £120m to cover its bill for an EU climate credits scheme.
Ken Odeluga, analyst at City Index, doesn’t believe today’s rally marks the end of the trade war jitters.Ken Odeluga, analyst at City Index, doesn’t believe today’s rally marks the end of the trade war jitters.
He says:He says:
Volatile gyrations require markets to go up as well as down; Tuesday brings the upswing.Volatile gyrations require markets to go up as well as down; Tuesday brings the upswing.
Nobody believes tariff turmoil is done; it would be difficult to do so given Washington’s signal that a further barrage of new 25% duties on $300bn of Chinese goods is in the works.Nobody believes tariff turmoil is done; it would be difficult to do so given Washington’s signal that a further barrage of new 25% duties on $300bn of Chinese goods is in the works.
Commodity prices are also rebounding a little. Soybean price are up almost 2% from yesterday’s 10-year lows.Commodity prices are also rebounding a little. Soybean price are up almost 2% from yesterday’s 10-year lows.
Ding ding! Shares are rising at the start of trading in New York, but it’s not a very strong rally.Ding ding! Shares are rising at the start of trading in New York, but it’s not a very strong rally.
The Dow Jones industrial average is up 88 points so far, a gain of 0.35% to 25,314. That doesn’t make much of a dent in yesterday’s 617-point selloff.The Dow Jones industrial average is up 88 points so far, a gain of 0.35% to 25,314. That doesn’t make much of a dent in yesterday’s 617-point selloff.
Technology stocks are recovering some ground, following Donald Trump’s pledge to reach a deal with China eventually.Technology stocks are recovering some ground, following Donald Trump’s pledge to reach a deal with China eventually.
Bloomberg have spotted a distinct change of tone in the Chinese media recently - towards more nationalistic rhetoric.Bloomberg have spotted a distinct change of tone in the Chinese media recently - towards more nationalistic rhetoric.
That could be a sign that Beijing wants to ensure the public back their leaders on this issue, and blame Donald Trump for the trade war. If so, that could mean they expect it to rumble on for a while.That could be a sign that Beijing wants to ensure the public back their leaders on this issue, and blame Donald Trump for the trade war. If so, that could mean they expect it to rumble on for a while.
Important story. After being very quiet on the issue for a long time, suddenly Chinese media is loudly taking a nationalist tone on trade issues https://t.co/Sgl56r3bgj pic.twitter.com/naM5it1KbLImportant story. After being very quiet on the issue for a long time, suddenly Chinese media is loudly taking a nationalist tone on trade issues https://t.co/Sgl56r3bgj pic.twitter.com/naM5it1KbL