S&P, Dow notch record highs ahead of signing of trade deal

Andrew Cummings
January 15, 2020

While the signing of the accord is widely expected to call a halt to the two-year trade war between the USA and China, a continuing battle over technology may keep relations on edge as the Trump administration focuses on tightening restrictions on Huawei Technologies Co. -China trade deal and hopes the start of the US corporate earnings season will not disappoint.

To be sure, The South China Morning Post reported the Chinese government said the trade war is "not over yet", adding the signing of Wednesday's agreement is just the "first round of a game".

US and euro zone government bond yields rose as the trade deal marks a major step in ending a dispute that has cut global growth and boosted demand for such safe-haven assets as bonds, gold and currencies like the Japanese yen and Swiss franc. China's Shanghai Composite dropped 0.28%, while Hong Kong's Hang Seng fell 0.24%, and Japan's Nikkei-225 rose 0.73%.

S&P 500 climbed 23 points, or 0.7% to end the session at about 3,288.

Middle East tensions rose after the United States killed a top Iranian general on January 2 in Baghdad, knocking global stocks off a rally spurred in late 2019 on hopes a trade deal would be signed.

Phase one of the U.S.

"Our expectation is a solid earnings season - nothing extraordinary but nothing really bad", Kristina Hooper, chief global market strategist at Invesco Ltd., said on Bloomberg TV. "We've priced in a big rally, we expect growth and now it's time to see it". "And are they more optimistic going into 2020?"

"Everything's humming along", he added.

"Markets will be hunting for signs of apprehension over this reporting season with outlooks and sentiment more pressing given where we are valuations-wise", said Bethel Loh, macro strategist at ThinkMarkets. "Let's not kid ourselves".

The Dow Jones Industrials picked up 41.38 points to 28,865.15.

The broad-based S&P 500 shed 0.2 per cent to 3,282.64, while the tech-rich Nasdaq Composite Index dropped 0.3 per cent to 9,250.25. The S&P and Nasdaq previously set new highs last Thursday. Shares also fell in Taiwan and in Southeast Asia.

USA government bond prices fell, with the price of the 10-year Treasury note down 4/32 to push its yield up to 1.8406%.

Global stocks drifted lower Wednesday as investors grew concerned that an initial U.S.

The yen fell 0.1% to 110.05 per dollar.The offshore yuan rose 0.1% to 6.8745 per dollar after rising 0.5% Monday.The British pound steadied at $1.2992 after a 0.6% decline Monday.The Bloomberg Dollar Spot Index rose 0.1%.The euro was flat at $1.1137. Treasury prices and yields move in opposite directions.

WTI February crude oil -0.4% to $58.00/bbl.

Other reports by iNewsToday