Shares in China jump on news of boost to infrastructure investment
The Shanghai composite rose 2.58% to close at about 2,925.72 and the Shenzhen component jumped 3.74% to finish its trading day at 9,037.67. The Shenzhen component soared 3.708% to close at 1,538.23. The CSI 300, which tracks the largest companies on the mainland, also gained 3.01% to close at approximately 3,719.28.
The moves on the mainland came after state news agency Xinhua reported Monday that China would enable local governments to use special bonds to finance certain investment projects, citing a “notice on local government bonds.”
Over in Hong Kong, the Hang Seng index added 0.83%, as of its final hour of trading. Hong Kong-listed shares of China Construction Bank rose 1.43%.
Elsewhere, Japan’s Nikkei 225 close 0.33% higher to close at 21,204.28, while the Topix index added 0.54% to finish its trading day at 1,561.32. South Korea’s Kospi rose 0.59% to close at 2,111.81 as shares of LG Electronics soared 6.03%.
Over in Australia, shares traded higher after returning from a holiday. The ASX 200 advanced 1.59% to close at 6,546.30 as most sectors saw gains.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||21204.28||0.00||0.00|
|HSI||Hang Seng Index||HSI||27789.34||210.70||0.76|
|ASX 200||S&P/ASX 200||ASX 200||6546.30||0.00||0.00|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7902.65||68.89||0.88|
The U.S. president also confirmed that more tariffs on Chinese goods will kick into place should Chinese President Xi Jinping fail to attend the upcoming G-20 meeting. The president previously threatened to put levies on another $300 billion in Chinese goods if a trade agreement is not reached soon.
“The end of month G20 meeting is gearing up to be another major ‘binary’ risk event that should keep markets very edgy in the coming days and weeks. It also complicates the (Federal Open Market Committee) meeting next week where the Fed has (to) decide whether downside risks to US growth justify an immediate shift to a formal easing bias,” Ray Attrill, head of foreign exchange strategy at National Australia Bank, wrote in a morning note.
“It doesn’t feel (like) the needle has moved a whole lot since June of 2018” as the accusations and measures from the U.S. “remain the same,” Taimur Baig, managing director and chief economist at Singapore’s DBS Bank, told CNBC’s “Squawk Box” on Tuesday.
“There probably is some sort of a method to this gambit, if you will, but I fail to see it because so far it seems like the sort of rhetoric that is coming out of the White House is going to make it impossible for a trade deal to be achieved,” Baig said.
Last week, Federal Reserve Chairman Jerome Powell said the U.S. central bank will “act as appropriate to sustain the expansion” after “closely monitoring” the impact of developments surrounding “trade negotiations and other matters.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.751 following an earlier low of 96.728.
The Japanese yen traded at 108.55 against the dollar after seeing an earlier high of 108.34, while the Australian dollar changed hands at $0.6958 after its decline from levels above $0.7000 in the previous session.
Oil prices were higher in the afternoon of Asian trading hours, with international benchmark Brent crude futures edging up 0.61% to $62.67 per barrel and U.S. crude futures gaining 1.09% to $53.84 per barrel.
— CNBC’s Michael Sheetz contributed to this report.
European stocks close higher despite renewed trade tariff threats
The pan-European Stoxx 600 closed provisionally up 0.72% during the session, basic resources jumping 2.8% while autos also climbed 1.7%, with most sectors trading in positive territory.
European Markets: FTSE, GDAXI, FCHI, IBEX
Asian stocks rose Tuesday afternoon as markets shrugged off the threat, the Shenzhen component leading gains with a 2.91% jump.
Markets had rallied worldwide Monday after the U.S. suspended its proposed tariffs on Mexican imports. German auto shares, including BMW, Daimler and Volkswagen, rose Tuesday as investors continued to digest the news.
Data out of the U.K. Tuesday showed wages in the three months to April beating forecasts while employment growth slowed, though the jobless rate held at its lowest rate since 1975.
In corporate news, Swiss drugmaker Roche’s $4.3 billion takeover of U.S. gene therapy specialist Spark Therapeutics has been postponed again due to regulatory scrutiny, while Reuters reported Monday that the Italian government is set to again extend the deadline to rescue loss-making airline Alitalia after failing to secure investors’ backing.
Danish hospital equipment company Ambu climbed to top the Stoxx 600, rising 7.8%. French video game producer Ubisoft’s stock hit the bottom at one point but recovered slightly to close 2.5% lower.
Dow falls, snapping 6-day winning streak
The Dow Jones Industrial Average ended the day down 14.17 points at 26,048.51, erasing a gain of 185.99 points. The S&P 500 slipped less than 0.1% to 2,885.72 while the Nasdaq Composite finished just below breakeven at 7,822.57. The industrials sector was the biggest laggard in the S&P 500, dropping 0.9% as Raytheon shares declined by 5.1%.
The Dow also snapped a six-day winning streak. However, the S&P 500 remained around 2.4% below an intraday record.
“At this point, a failure to break out to new highs would be viewed as negative. The month is only a week and a half old, but we’ve got a head of steam now. We’re seeing evidence of more individual stocks in the S&P 500 making new highs. There’s a bit of an expectations the S&P 500 might be able to test those levels we saw in April,” said Willie Delwiche, investment strategist at Baird.
“The potential headwind to that is what happens with sentiment. Sentiment turned so negative in May and now, as stock rebound in June, we’re seeing pessimism being replaced with optimism. If it comes in too fast, that can shift from being a tailwind for stocks to a headwind,” Delwiche said.
Drew Angerer | Getty Images News | Getty Images
President Donald Trump said Sunday that a 5% levy all Mexican imports into the U.S. would be suspended indefinitely. He added he had “full confidence” in Mexico’s ability to crack down on immigration from Central America.
Global stocks rose after Chinese state news agency Xinhua said the country would let local governments use bonds to finance infrastructure projects. The Shanghai Composite jumped 2.6% overnight, while the Stoxx 600 index in Europe gained 0.7%.
Market expectations for lower rates by July sat around 78%, according to the CME Group’s FedWatch tool. Investors are also pricing in a 97.1% chance of lower rates by December, according to FedWatch.
These forecasts have been rising amid weakening U.S. economic data. Monthly jobs growth slowed to 75,000 in May, missing an estimate of 180,000. Meanwhile, manufacturing activity in the U.S. grew at its slowest pace since 2016.
Stocks are on pace for sharp monthly gains after a strong decline in May. The major indexes are all up nearly 5%. In May, the Dow and S&P 500 dropped more than 6% each while the Nasdaq slid nearly 8%.
“The pendulum has swung significantly in the other direction,” said Art Hogan, chief market strategist at National Securities. “We spent six weeks grinding lower and now we’re spending seven days popping higher.”
“It feels like we went from despair to exuberance in too short of a period of time without much changing in terms of facts. I’d like to see some stabilization here,” he said.