Stocks Rise on Possible Delay for Mexico Tariffs: Markets Wrap

(Bloomberg) -- U.S. stocks climbed after a report the U.S. is considering delaying President Donald Trump’s plan to impose tariffs on Mexico. Treasuries pared gains and the peso rebounded from Thursday’s lows.

The S&P 500 Index extended its advance after Bloomberg News reported that Mexico is pushing for more time to negotiate. Treasuries rose on speculation that major central banks will keep a dovish stance as the trade war jeopardizes growth. The euro rallied as European Central Bank President Mario Draghi touted “somewhat better” than expected first-quarter data.

With Vice President Mike Pence saying the U.S. still plans to impose tariffs on Mexico next week while talks continue, the situation remains fluid. Several analysts have forecast increased risk of a recession in the world’s largest economy. Goldman Sachs Group Inc. put the odds that the U.S. imposes duties on imports from Mexico at 70%, according to a note dated June 5.

As trade tension spurs speculation that rate cuts are coming, Friday’s jobs report will be especially scrutinized for signs of cracks in the economy. The International Monetary Fund said the U.S. expansion risks being knocked off course by a further escalation of the trade conflict or a significant downturn in financial markets.

Read: Baffled Stock Analysts Have No Idea What They Want in Jobs Data

Bets the Federal Reserve will slash borrowing costs have risen since Chairman Jerome Powell signaled this week he’s open to easier policy amid trade tension. Draghi used similar tactics in promising to react to any deterioration in the outlook. Australia this week cut rates for the first time in three years, and there’s speculation the Bank of Japan will add stimulus.

Here are some notable events coming up:

• Theresa May steps down on Friday as leader of the Conservative Party.
• Friday’s U.S. jobs report is projected to show payrolls rose by 175,000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.
• Finance ministers and central bank governors from the G-20 nations gather in Fukuoka, Japan this weekend.

These are some of the main moves in markets:

Stocks

• The S&P 500 climbed 0.6% to 2,843.49 as of 4 p.m. New York time.
• The Stoxx Europe 600 Index declined less than 0.05%.
• The MSCI Asia Pacific Index fell 0.3%.

Currencies

• The Bloomberg Dollar Spot Index decreased 0.1%.
• The euro climbed 0.5% to $1.1273.
• The Japanese yen declined less than 0.05% to 108.51 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.13%.
• Germany’s 10-year yield slid one basis point to -0.24%.
• Britain’s 10-year yield declined four basis points to 0.825%.

Commodities

• The Bloomberg Commodity Index gained 0.8%.
• West Texas Intermediate crude climbed to $52.59 a barrel.

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