Global Stocks Waver as Tension Mounts on US-China Technology Ties

York Stock Exchange in New York. Global stock markets are subdued as investors look ahead to the signing of an interim U.S.-China trade deal. Indexes were mixed in Europe while those in Shanghai Hong Ko

Wall Street boosted by trade optimism

In addition, the promise of the trade deal between the US and China has helped lift markets in recent weeks, easing investors' concerns of further escalation in the costly conflict.

Apple, Facebook Inc, Netflix Inc, Microsoft Corp and Amazon.com Inc, which have powered the longest bull run in USA equities, were among the top contributors to record high closes for the S&P 500 and Nasdaq. The Dow Jones industrial average added 57 points or 0.2% to 28,996.

Japan's Nikkei 225 index lost 0.5% to 23,916.58 while the Hang Seng in Hong Kong dropped 0.6% to 28,722.86. UnitedHealth, the largest health insurance company in the country, climbed 2.2% in early trading Wednesday, after reporting solid quarterly results.

With the S&P 500 at record levels, equivalent to around 18 times expected earnings, algorithmic traders and human investors interpreted the Bloomberg report as a reason to sell, said Joe Saluzzi, co-manager of Themis Trading, in Chatham, New Jersey.

The focus for Tuesday will primarily be on results from the likes of Citigroup, JP Morgan Chase and Wells Fargo as earnings season official kicks off yet again.

The S&P 500 posted 74 new 52-week highs and no new lows; the Nasdaq Composite recorded 151 new highs and 20 new lows.

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Stocks saw modest gains across the region, while US futures ticked higher.

The S&P 500 .SPX gained 0.19% to 3,289.3, its highest ever close.

An easing of Middle East tensions and the Phase 1 US-China trade agreement, which is expected to be signed in Washington on Wednesday, have encouraged riskier bets over the last week.

Monday's rally on Wall Street added to gains from last week driven by an easing of tension between the US and Iran.

Oanda's Craig Erlam said: "Details of the trade deal are starting to emerge but there's still a lot we don't know". The yield on 10-year German bonds dipped to minus 0.200%, from minus 0.168% on Tuesday.

Wells Fargo & Co tumbled 5.4% after reporting a slump in profit as it set aside $1.5 billion for legal expenses. The pickup in yields helped lift financial stocks, as it makes it possible for banks to charge higher interest rates on mortgages and other consumer loans. That would mark the fourth straight quarter of declining profits, the longest stretch in four years.

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As for US CPI, "the overall CPI (forecast: up 0.3%) was probably boosted by energy prices, which were falling a year ago; the YoY change probably rose to 2.4% from 2.1%".

Wall Street expects S&P 500 companies' corporate earnings to decrease 2% in the last three months of 2019.

Reference crude lost 11 cents to $ 58.12 a barrel in electronic trading on the New York Mercantile Exchange.

Crude oil futures rose 0.62% at $58.44 per barrel and Brent crude climbed 0.31% at $64.69. It earned 29 cents on Tuesday to $ 64.49 per barrel.

Gold rebounded, gaining $8.00 to $1,552.60 per ounce. The euro rose from $ 1,1128 to $ 1,11145.

United States and China sign phase one of new trade deal
The deal also restores a twice-yearly dialogue process that previous administrations conducted regularly but that Trump scrapped. The "phase one" agreement loosens some US tariffs against China and secures new purchases of American-made items for Beijing.


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