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Equities Rebound, Bond Yields Rise, Trade Rhetoric Intensifies

Thomas Hughes
Global equities rebound despite mounting fear an all-out trade war will drag on world GDP.

The U.S. Equities Rise In Early Tuesday Trading

The U.S. futures are indicating a positive open in early Thursday trading. The rebound in prices is due to a similar rebound in bond yields that has taken some fear out of the market. The yield on the ten-year Treasury rose to 2.62% in Thursday morning trading but does not remove the threat of yield-curve inversion. The tech-heavy NASDAQ Composite is in the lead with an indicated gain of 0.35% while the Dow Jones and S&P 500 are up 0.20% and 0.30%.

The banks are leading the broader market on the heels of higher rates. Rising rates are good for banks as they make more profits when they can charge more for loans. Citigroup led the bunch with an advance of 1.2% following an upgrade from Goldman Sachs. Goldman Sachs raised their rating to Buy from neutral.

In trade news, the rhetoric is ramping up and indicates a deepening divide between U.S. and Chinese wants. China, through its state-sponsored media outlets, has threatened additional retaliatory measures saying “don’t say we didn’t warn you.” The Chinese Vice Foreign Minister was also quoted saying U.S. actions amount to economic terrorism. China has also stopped its purchases of U.S. soybeans.

European Markets Rebound, Trade Threat Still In Focus

The major European market rebound on the heels of rising U.S. bond yields. The move was led by the UK FTSE 100 with a gain of 0.40% in midday trading. The German DAX and French CAC were both up about 0.30%. The positive sentiment is likely to be short-lived though as mounting trade tensions threaten to upset global tech industries. Yesterday’s threat from China to disrupt the rare-Earth metals market is one that investors should take heed of. Rare-Earth metals are required in the manufacture of batteries and tech of all varieties.

In stock news, shares of Porsche were moving lower after the company was raided by EU officials. The EU alleges Porsche executives have been misusing corporate funds. Shares of Nissan were moving higher, however, after its CEO said the merger between Renault and Fiat would have no downside effect on the Nissan-Renault alliance.

Asian Markets Moved Lower On Thursday

Most Asian markets moved lower on Thursday as the threat of all-out trade war mounts. The Australian ASX was hardest hit with a loss of -0.74% as nearly all sectors move lower. The Hong Kong Hang Seng shed -0.44% while the Shanghai Composite and Nikkei both shed about -0.30%. The Korean Kospi was the only index to buck the trend, rising nearly 0.80%. The rise in Korea was led by hopes for the tech industry and a 1.79% increase in Samsung.

This article was originally posted on FX Empire

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