Markets Right Now: Stocks rise as trade war fears ease

Markets Right Now: Stocks rise as trade war fears ease

The Russell 2000 index fell just 0.22% in midday trade as it's made up of small-cap stocks which are closely tied to the USA economy and have less exposure to the global market.

Broad measures of American equities have held up better than their Chinese counterparts, but striation within the U.S. markets suggests that investors anticipate steep losses in some stalwart names. While S&P 500 Index futures slid 1.5 per cent overnight, the cash measure closed lower by just one-third of that. Britain's FTSE 100 gained 0.9 percent to 7,668.

The latest round of tariffs comes in retaliation for China's announcement that it would respond in kind to previous tariffs on $50 billion of Chinese imports to the U.S.

Investors sought safety in telecommunications, utilities, and other high-dividend stocks like Verizon, Procter & Gamble and Johnson & Johnson.

In an issue that's become linked to the trade dispute, the Senate on Monday approved a defense policy bill that would block a White House plan to allow Chinese telecom giant ZTE to buy component parts from the U.S. ZTE is accused of violating trade laws by selling sensitive technologies to North Korea and Iran. Hong Kong's Hang Seng rose 0.8 percent to 29,696.17 and the Shanghai Composite in mainland China increased 0.3 percent to 2,915.73. In 2017, the company generated 20 percent of its sales in Greater China, accumulating about $45 billion. Boeing and Caterpillar fell more than 3% apiece.

The U.S.is now compiling a list of $200 billion in Chinese imports to tax at 10 percent. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped by 3.3 basis points to 2.893 percent.

The escalating tension on trade sent European and Asian markets lower as well, while growth-linked commodities like copper and crude fell.

Up north, Toronto's TSX dropped 78.8 points to hover at 16,304 and the Russell 2000 index of small-cap stocks lost nearly 9 points to cling to 1,683.

"A U.S. -China trade spat alone won't hurt global growth". In pre-market trading on Tuesday, the Dow tanked over 350 points after Chinese stocks experienced a similar plunge. In Europe, Germany's Dax index and France's Cac 40 were both about 1.5% lower in afternoon trading.

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For months, the US and China have been sparring over tariffs on goods exported from China to the USA and vice versa. The tariffs were quickly matched by China on USA exports.

Initially, 545 United States products valued at $34 billion will be targeted by China, mimicking the Trump administration's tariff rollout.

Smaller, more USA focused stocks were doing better than more internationally-focused US stocks, said Mokhtari.

Meanwhile, the yuan weakened to a low of 6.4754 in afternoon trade, the weakest since January 12, while China's benchmark 10-year treasury futures jumped, as bond yields fall.

Shanghai-based hedge manager David Dai said the rapidly escalating trade tensions between Washington and Beijing have added woes to an already fragile stock market and make calling the bottom very hard.

Futures are showing the Dow Jones industrials and S&P 500 each headed for a decline of at least 1 percent.

Trump is now threatening a 10 percent tariff on another $200 billion in goods.

Away from Mr Trump's dispute with China, Russia said it would impose tariffs on certain American goods in response to the recent tariffs placed on steel and aluminium imports by the US. In April the Commerce Department blocked ZTE from buying USA components for seven years, a move that amounted to a death sentence for the company.

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