What you need to know:
> S&P 500 up 0.3%, Nasdaq on track for record close.
> Trump tweets provide mixed backdrop to talks.
> Currencies trapped in narrow ranges.
> Turkish lira rebounds.
> Facebook earnings in focus.
Stock Market News:
The Trump administration has promised billions of dollars in aid to placate farmers and offset the economic impact of its trade wars.The move comes as the European Commission’s president Jean-Claude Juncker arrives in Washington for talks aimed at defusing the escalating trade tensions.
Sergio Marchionne dies
The Canadian-Italian chief executive, who saved Italy’s Fiat from bankruptcy and merged it with ailing US carmaker Chrysler, has died at the age of 66 from complications following surgery.
UK prime minister takes charge of Brexit talks
Theresa May has taken personal control over the UK’s Brexit negotiating team, beefing up her Downing Street operation and attempting to end the rivalries that have undermined her exit strategy.
Facebook makes friends through China subsidiary
The social networking site confirmed on Tuesday that it had set up a Chinese subsidiary, as part of an “innovation hub” in Zhejiang to support developers and start-ups in the country. Facebook is banned in China but sells advertisements to Chinese companies seeking customers outside the Great Firewall.
More dirty tricks from carmakers
The European Commission has found evidence that carmakers are already manipulating emissions for new standards that come into force in 2020, this time using “tricks” to make test results look worse than they are.
CNN publishes Trump-Cohen tape
CNN has published a recording of Donald Trump apparently talking about buying the story rights of a former Playboy model who has claimed she had an affair with him, in a dramatic new turn in the feud between the president and his former attorney Michael Cohen. The audio tape of the 2016 conversation was provided by Mr Cohen’s attorney.
US earnings aplenty
Facebook is expected to report a rise in second-quarter profit as the social network’s mobile adverts continue to benefit from businesses spending, particularly on video adverts. Boeing is expected to report a rise in second-quarter revenue and profits helped by strong demand for air travel, while investors will look for an update on its full-year financial forecast. Automakers General Motors, Ford and Fiat Chrysler will report second-quarter results, with the focus on the latter’s strategy after the sudden appointment of Mike Manley as chief executive.
Concerns about an intensification of transatlantic trade tensions helped drag European stocks from a five-week high although their US counterparts overcame a hesitant start.
Strength for tech stocks helped put the Nasdaq Composite index on track for a record closing high, while the broader US market was firm even after President Donald Trump stepped up his rhetoric on the issue of trade tariffs.
“Conflicting comments from Mr Trump saw the president pronounce that ‘tariffs are the greatest’, only to suggest that he was ready to ‘drop all tariffs, barriers and subsidies’ against the EU,” said Joshua Mahoney, analyst at IG.
“The big bone of contention is going to be the automotive sector, with rumour of a 25 per cent tariff being imposed by Trump on almost $200bn worth of automobile imports later this year.”
General Motors provided a timely reminder of the potential impact on the US economy of a global trade war as the carmaker cut its full-year earnings forecasts because of higher steel and aluminium costs.
GM shares tumbled, keeping the S&P 500 reined in. Across the Atlantic, the Xetra Dax index in Frankfurt dropped sharply as carmakers came under pressure as participants awaited news from a meeting between President Donald Trump and Jean-Claude Juncker, head of the European Commission.
But energy stocks were a firm feature as oil prices got a lift from data showing a larger than expected drop in weekly US crude and gasoline inventories.
Major currencies were stuck within narrow ranges ahead of the meeting in Washington with the dollar index a shade lower and the yen hovering around a two-week high against the US currency.
The outlook for Japanese assets has come under scrutiny this week following reports that the Bank of Japan could tweak is policy stance when it meets next week.
The European Central Bank holds its July meeting today — the first since its agreement last month to end net asset purchases by the end of the year, noted Mantas Vanagas at Daiwa Capital Markets.
“[ECB President Mario] Draghi is likely to stick very much to the language agreed in June, despite the continued soft tone to recent economic data.”
By midday in New York, the S&P 500 was up 0.3 per cent at 2,828, although the Dow Jones Industrial Average was 0.2 per cent weaker.
GM shares were down 6.5 per cent.
The Nasdaq Composite grabbed the headlines as it climbed 0.6 per cent — putting it on course for a record close but leaving it shy of Tuesday’s all-time intraday peak.
The pan-European Stoxx 600 index ended 0.3 per cent lower while the Xetra Dax in Frankfurt shed 0.9 per cent and the FTSE 100 in the UK fell 0.7 per cent.
In Asia, China-focused stocks were mixed as this week’s stimulus-driven rally showed signs of losing steam.
The CSI 300 index of major Shanghai and Shenzhen-listed stocks ended 0.1 per cent lower after dipping in and out of negative territory in the morning session, but in Hong Kong, the Hang Seng China Enterprises index rose 0.9 per cent.
Forex and fixed income:
The dollar index was down less than 0.1 per cent as the euro traded flat at $1.1685. The US currency was of 0.3 per cent against the yen ¥110.87, near a two-wek intraday low struck on Monday.
The Turkish lira was up 1.1 per cent against the dollar on Wednesday, clawing back some of its losses from a chaotic session the previous day, which saw currency traders wrongfooted when the central bank kept interest rates on hold despite soaring inflation.
China’s onshore renminbi also rebounded. The exchange rate, which moves within a trading band of 2 per cent to either side of a midpoint, was 0.55 per cent stronger at Rmb6.7538 per dollar, a day after the Chinese currency touched a fresh one-year low on the announcement of new economic stimulus.
Japanese government bond prices reversed an earlier rally to trade flat, amid persistent speculation about the trajectory of Japan’s monetary policy.
“We do not see the Bank of Japan retreating from their longstanding commitment to highly accommodative monetary policy. Rather, we view this as an adjustment to ensure their strategies for monetary easing remain sustainable,” said Yoshinori Shigemi, global market strategist, JPMorgan Asset Management.
“Pivoting to more sustainable policies may help enable the Bank to support a longer economic expansion.”
The 10-year US Treasury yield was 1 basis point lower at 2.94 per cent, while the two-year yield was 1bp higher at 2.66 per cent — pushing the gap between the two back towards a recent 11-year low.
Oil prices moved higher after the Energy Information Administration said US crude stockpiles fell by 6.15m barrels in the week ended July 20, more than expected.
Brent crude was up 0.7 per cent at $73.98 a barrel while US West Texas Intermediate was 1.4 per cent higher at $69.43.
Gold was up $7 at $1,231 an ounce.