Stocks edge lower as U.S.-China relations sour

Andrew Cummings
May 23, 2020

The S&P 500 and NASDAQ also rose more than 3% this week. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 2.7%; Japan's Nikkei .N225 fell 0.8%.

Strength in technology, communications and real estate stocks helped reverse much of the market's early slide. Energy stocks fell the most as crude oil prices closed lower after six straight gains. Bond yields were mixed.

"Although both sides [U.S. and China] highlighted overnight progress on trade deal implementation and the intention to keep it going, the overall relationship is deteriorating fast", wrote Sebastien Barbe, the head of emerging-market research and strategy at Credit Agricole CIB.

Stocks closed little changed Friday as investors capped a strong week of gains amid optimism around a potential coronavirus vaccine and the US reopening its economy.

Investors have also greeted gradual steps by states to reopen their economies.

Traders remain wary, however, that the reopening of businesses could lead to another surge in infections, potentially hobbling efforts to get the nation's battered economy growing again.

Alberta's Western Canadian Select fell 5.89 per cent to US$23.16 per barrel, though Canadian crude is only priced a handful of times per day. "There's still an bad lot of uncertainty we have to work though".

Futures for the S&P 500 sailed 6.5 points, or 0.4%, higher at 2,943.50. The index is still down 12.7% from its all-time high in February. The Nasdaq outperformed, rising 0.4% to 9,324.

U.S. stocks ended Friday mixed, but the Dow Joens industrial average still turned in its best week since early April.

Small-company stocks did more than twice as well as the rest of the market this week, a bullish signal suggesting that investors expect the economy is on the path to recovery. On Friday, the Russell 2000 gained 7.97 points, or 0.6%, to 1,355.53.

The S&P 500 closed lower on Thursday, with signs mounting that President Donald Trump will make his tough stance on China a key element of his re-election bid.

Investors are now keenly focused on the process of reopening the US economy, which is likely to continue accelerating as the summer progresses. That law is projected to strengthen Beijing's hold over Hong Kong.

Markets are caught between poor economic data and U.S.

Oil prices slid 55 cents to $33.37 US a barrel.

Oil prices retreated, with USA benchmark West Texas Intermediate down about three per cent to trade at US$32.85 per barrel after threatening to breach the US$35 level earlier in the week.

Crude oil started the year at about $60 a barrel, but plummeted earlier this year as demand sank due to widespread travel and business shutdowns related to the coronavirus.

"I still think this is going to be a hard period for oil because even if the economy is reopened, it doesn't mean that behaviourally people are just going to go back to the way things were".

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