StockMarketNews.Today – “Investors are torn. The fundamentals look good. Indeed, the US economy is booming and there are signs that growth is re-accelerating in Europe. The early signals from US corporate earnings look robust. At the same time there is an increasingly damaging exchange of verbal blows between the US and Chinese authorities,” said Karen Ward, chief market strategist for Europe at JPMorgan Asset Management.
“It is hard to predict whether it is in the US president’s political interests to dial [rhetoric] up or dial it down ahead of the midterms.”
Stocks are fighting back from sharp losses as investors watch the US-China trade spat, while earnings season offers some distraction from the dispute, and oil prices are steadier following the biggest one-day tumble in more than two years.
The rebound in Europe is more modest than that seen in China and the wider Asia-Pacific region, but it follows the trading pattern seen during previous rounds of the trade clash — sharp losses followed by consolidation. Wall Street is higher in opening trade.
The dollar is holding steady and the yen is ticking lower, while China’s currency is moderately weaker, easing fears that the trade dispute could reach the currency market.
Oil prices are bouncing up from their sharp drop, which came on concern about the outlook for demand in the context of the trade dispute.
Brent, the international crude benchmark, is up 0.6 per cent at $73.84 a barrel after a 6.9 per cent tumble over the previous session.
On Wall Street, the S&P 500 is up 0.5 per cent, with the Nasdaq Composite 0.4 per cent higher.
The Europe-wide Stoxx 600 is up 0.6 per cent, with Frankfurt’s Xetra Dax up 0.3 per cent, while London’s FTSE 100 is up 0.7 per cent.
Hong Kong’s Hang Seng index climbed 0.6 per cent following a 1.3 per cent fall in the previous session.
Mainland Chinese shares posted better gains with the CSI 300 up 2.2 per cent, erasing the previous session’s 1.7 per cent loss.
Japan’s Topix rose 0.5 per cent.
Forex and fixed income
The dollar index is holding around a seven-session high after adding 0.6 per cent in the previous session when haven demand drew investors into the world’s reserve currency. The dollar is up 0.4 per cent against the yen at a six-month high of ¥112.46.
China’s onshore renminbi is 0.2 per cent softer at Rmb6.6908, well away from the extremes of its 2 per cent band either side of a daily midpoint set by the country’s central bank.
The yield on the 10-year US Treasury is 1 basis point higher at 2.85 per cent, with that on the equivalent German Bund down 1bp at 0.30 per cent.
There has been little impact from data showing that headline US consumer prices rose 2.9 per cent in the year to June, up from the 2.8 per cent pace recorded in May and the highest reading since February of 2012.
The core consumer price index, which excludes volatile food and energy prices, was up 2.3 per cent year-on-year, putting it at an 18 month high.
“US CPI was in line with expectations for June, suggesting that prices are rising at a manageable rate,” said Kathleen Brooks, research director at Capital Index.
“The latest price data from the US do not significantly move the dial when it comes to Federal Reserve rate hike expectations for the rest of this year.”
There is no respite for the Turkish lira, which is down 0.6 per cent at TL4.8480 per dollar, having earlier hit a fresh record low of TL4.9711 as investor angst over the country’s economy intensified. Turkish president Recep Tayyip Erdogan on Wednesday predicted a fall in interest rates.
The pound is up 0.2 per cent against the dollar at $1.3195 while the euro is flat at $1.1680.