Only The year It must have said 2019 instead of 2018
Chinese markets rise after release of higher-than-expected May trade surplus
Mainland Chinese stocks were higher by the afternoon, with the Shenzhen component jumping 1.61% and the Shenzhen composite rising 1.473%. The Shanghai composite also gained 0.98%.
Over in Hong Kong, the Hang Seng index surged 2.03% as shares of Chinese tech giant Tencent soared 2.91%.
Official Chinese trade data for May showed the country’s exports beating forecasts and imports falling short of expectations, leaving it with an overall trade surplus of $41.65 billion for the month.
May exports in China rose 1.1% as compared to a year earlier against expectations of a 3.8% decline by analysts in a Reuters poll. Imports, which were also expected to fall 3.8%, dropped 8.5% instead.
The onshore Chinese yuan touched its lowest point in 2019 following the data release. It last traded at 6.9334 against the dollar, while its offshore counterpart also declined to 6.9523 against the greenback.
The Australian dollar, whose fortunes are often seen to be closely tied to that of China given the two countries’ trade relationship, changed hands at $0.6970 following an earlier high of $0.7022.
Japan’s Nikkei 225 jumped 1.03% in afternoon trade, while the Topix index gained 1.19%. Data on Monday showed that Japan’s economy grew at a slightly higher annualized rate than initially estimated —2.2% in the January to March period, as compared to economists’ median forecast of 2.1% growth in a Reuters poll.
South Korea’s Kospi also rose 0.92%, with shares of chipmaker SK Hynix gaining more than 1.5%.
Autos in both markets jumped on the news that Trump had withdrawn his tariff threat on Mexican goods. They had initially tumbled when the levies were announced.
South Korea’s Kia Motors surged as much as 4%, while Japan’s Toyota bounced 1.56%, and Nissan rose 0.96%. Mexico is used as a production base by many Japanese automakers.
Meanwhile, markets in Australia are closed on Monday for a holiday.
Asia-Pacific Market Indexes Chart
The latest development comes as the U.S. remains locked in a trade war with China as the two economic powerhouses hit an impasse in negotiations.
U.S. Treasury Secretary Steven Mnuchin, who has been among the lead negotiators involved in trade talks with China, told CNBC on Sunday that Trump will decide on whether to implement more tariffs on China after the American leader meets with Chinese President Xi Jinping later in June.
“We’re going to need to see action, and President Trump is going to need to make sure he’s clear that we’re moving in the right direction to a deal,” Mnuchin told CNBC. “The president will make a decision after the meeting.”
Trump has previously indicated he expects to plan his next trade moves after the G-20 meeting in Japan.
One investor told CNBC that the markets are “going to wait till that big event.”
“Everybody’s hopeful they will strike a deal, it’s not going to be (an) easy meeting. Quite clearly, there’s been a lot of ... rhetoric going on between the Chinese and the U.S., you don’t see signs of compromise,” Vasu Menon, vice president of group wealth management at Singapore’s OCBC Bank, told CNBC’s “Squawk Box” on Monday.
Meanwhile, a drastic slowdown for jobs creation in May increased the odds that the U.S. would go on an easier monetary policy. Nonfarm payrolls were up by 75,000 in May — the second time in four months that the figure increased by less than 100,000. Economists surveyed by Dow Jones had been looking for a gain of 180,000.
Concerns over the potential impact of U.S. trade policy and signs of a slowing American economy have raised expectations that the Federal Reserve would slash interest rates.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.776 after declining from levels above 97.6 last week. The Japanese yen traded at 108.60 against the dollar after touching levels below 108.0 last week.
Oil prices were higher in the afternoon of Asian trading hours, with the international benchmark Brent crude futures contract adding 0.52% to $63.62 per barrel and U.S. crude futures rising 0.61% to $54.32 per barrel.
— Reuters, along with CNBC’s Fred Imbert and Everett Rosenfeld, contributed to this report.
European stocks close higher as trade tensions ease; UK economic data disappoints
The pan-European Stoxx 600 edged 0.2% higher during the session, basic resources leading gains with a 1.2% rise while utilities fell 0.7%.
German stocks were closed for a holiday.
European Markets: FTSE, GDAXI, FCHI, IBEX
Earlier, stocks in Asia traded higher Monday on the news, Hong Kong’s Hang Seng index surging 2.03%, after official Chinese trade data for may beat forecasts and showed an overall trade surplus of $41.65 billion for the month.
U.S. Treasury Secretary Steven Mnuchin, a lead negotiator in trade talks with China, told CNBC on Sunday that Trump will decide whether to implement more tariffs on China after meeting with Chinese President XI Jinping later in June.
G-20 finance leaders on Sunday said that trade and geopolitical tensions have intensified, raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening U.S.-China trade conflict.
Data released Monday showed that Britain’s economy sharply contracted in April after the biggest fall in car production since records began, as manufacturers were unable to reverse closures planned for the country’s departure from the European Union.
In corporate news, Reuters reported that Fiat Chrysler (FCA) and Renault are seeking ways to resuscitate their collapsed merger and secure the approval of Renault’s alliance partner Nissan. FCA shares jumped 2%, also bolstered after self-driving car software startup Aurora said Sunday it would partner with the company to build autonomous platforms for commercial vehicles.
Renault climbed 2.3% as investors reacted to the merger news, while French Finance Minister Bruno Le Maire told CNBC Monday that the country has a strategy to reinforce a fragile alliance between Renault and Nissan.
In terms of individual stocks, Danish biotech company Novozymes continued to slide. falling 6.7%, while Swiss vacuum manufacturer Vat Group rose 3.9%.
Dow rises 70 points, up for sixth straight day, after Mexico tariffs avoided
The Dow Jones Industrial Average rose for a sixth straight session, finishing the day 78.74 points, or 0.3%, higher at 26,062.68. The S&P 500 gained about 0.5% at 2,886.73 and is now a little more than 2% from its intraday all-time high hit on May 1. The Nasdaq Composite rose 1.1% to 7,823.17 on Monday, led by Amazon.
Stocks closed off their highs of the day. The Dow was up 226.67 points at its high.
President Donald Trump announced Sunday that proposed tariffs on Mexican imports would be suspended indefinitely. Trump said in a Twitter post that he has “full confidence” that Mexico will crack down on migration from Central America, after the two neighbors reached a consensus.
Shares of GM and Ford, two companies that had a lot to lose in a trade battle with Mexico because of their production there, jumped 1.5% and 0.6% respectively on Monday.
“The avoidance of Mexican tariffs is a positive but this wasn’t entirely unexpected and it doesn’t by any means erase the enormous risks inherent in Trump’s trade policies,” Adam Crisafulli, a J.P. Morgan managing director, said in a note on Monday.
Meanwhile, investors are closely monitoring the development in the U.S.-China trade war. Trump told CNBC’s Joe Kernen on Monday that he believes China will make a deal with the U.S. “because they’re going to have to.”
“Right now, China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs,” Trump said.
Trump and Chinese leader Xi Jinping are set to meet at the G-20 Summit later this month after both countries slapped tariffs and made tit-for-tat threats. Trump said Monday if Xi skips the meeting, more China tariffs will go into effect immediately. Trump had threatened to impose duties on another $300 billion in Chinese goods if they can’t strike a deal soon.
“You have to be impressive by how resilient the U.S. stock market continues to be in the face of all the uncertainties,” said Jim Solloway, chief market strategist at SEI Investments. “It just shows the underlying forces that affect stock prices remains resilient and healthy. The market is reacting to the underlying strength of the economy and resilience, and I don’t see that suddenly crumpling even in the face of additional Chinese tariffs.”
Stocks were sent to a downward spiral by a Trump tweet on May 5 threatening to impose tariffs on Chinese imports. The Dow posted a six-week losing streak, while the S&P 500 suffered its worst month since December in May amid the escalated trade war. Now the market has made back most of the losses with the Dow about 3% from its all-time high and the S&P 500 about 2% from its record.
The White House acting budget chief is reportedly seeking to delay the restrictions on Chinese telecom giant Huawei, which would halt its ability to purchase U.S.-made chips. Chipmakers Nvidia and Advanced Micro Devices gained 2.8% and 4% respectively on Monday following the news.
Salesforce.com announced its acquisition of big gettdata company Tableau Software on Monday. The $15.3 billion all-stock deal marks the biggest purchase in the company’s history. Tableau’s stock surged more than 33% on Monday and Salesforce fell more than 5%.
Data out Monday morning showed China’s overall trade surplus hit $41.65 billion in May, higher than what economists were expecting.
The major indexes are building on last week’s big gains on rate-cut hopes.The Dow snapped a six-week losing streak last week, rising 4.7%, its biggest weekly gain since November. The S&P 500 and Nasdaq were up 4.4% and 3.9% last week, respectively.
— CNBC’s Silvia Amaro, Fred Imbert and Spencer Kimball contributed to this report.