U.S. Stocks Bounce Back on Latest Trade-War Moves: Markets Wrap

(Bloomberg) --

U.S. stocks rebounded on Tuesday as the trade-war driven back-and-forth that has dominated markets this month showed few signs of abating. Treasuries slipped while the dollar gained.

The S&P 500 Index climbed after the U.S. decided to grant limited relief for consumers and carriers that do business with Huawei Technologies -- a day after the White House’s moves against the Chinese telecom giant battered stocks. Semiconductors bounced back from yesterday’s 4% sell-off, logging their first gain in four sessions.

Risk assets have been whipsawed in May as the world’s largest economies ratchet up both rhetoric and action on trade, with the latest phase focused on Huawei and its suppliers and customers. For all the turmoil, a gauge of global stocks remains within 5% of an all-time high, while the S&P 500 is about 3% from a record. Against that backdrop, investors will be closely watching U.S. data this week, as well as Federal Reserve policy-meeting minutes due on Wednesday.

“There’s two things that drive the market -- emotion and fundamentals,” Kevin Miller, chief executive officer of Minnesota-based E-Valuator Funds, said in an interview at Bloomberg’s New York headquarters. “Uncertainty is obviously something the markets do not like, but from a fundamental perspective, the markets are still really strong.”

In Europe, technology shares powered the Stoxx 600 Index higher. Chinese equities had the strongest gains in the Asian session, while their Japanese peers ended lower. An advance for Samsung Electronics Co. helped bolster Korean shares, on bets it may benefit from Huawei’s need to shift away from American suppliers.

Elsewhere, the pound fluctuated after U.K. Prime Minister Theresa May said she’s prepared to offer parliament a vote on holding a second Brexit referendum. The British currency spiked higher on her remarks before giving up those gains as some key lawmakers responded with skepticism. Turkey’s lira stayed lower after the country’s central bank effectively lowered its main interest rate, undoing a limited tightening of policy.

Here are some notable events coming up:

• The Fed minutes of its FOMC April 30-May 1 policy meeting will be released Wednesday.
• Counting of votes from the Indian general elections takes place Thursday as Prime Minister Narendra Modi attempts to secure a second term.
• ECB President Mario Draghi speaks in Frankfurt on Wednesday.
• The European Parliament holds continent-wide elections May 23-26.
• On Thursday, the ECB publishes its account of the April monetary policy decision.

And these are the main moves in markets:

Stocks

• The S&P 500 Index gained 0.9% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.5%.
• The U.K.’s FTSE 100 Index increased 0.2%.
• The MSCI Emerging Market Index advanced 0.5%, its biggest gain in five weeks.

Currencies

• The Bloomberg Dollar Spot Index increased 0.2% to its highest in five months.
• The euro decreased less than 0.05% to $1.1161.
• The British pound sank 0.2% to $1.27.
• The Japanese yen decreased 0.5% to 110.56 per dollar.

Bonds

• The yield on 10-year Treasuries advanced one basis point to 2.43%, the highest in more than a week.
• Germany’s 10-year yield gained two basis points to -0.06%, the highest in over a week.
• Britain’s 10-year yield advanced three basis points to 1.083%.

Commodities

• West Texas Intermediate crude fell 0.2% to $62.99 a barrel, the biggest drop in over a week.
• Gold dipped 0.2% to $1,274.75 an ounce, the weakest in almost three weeks.

--With assistance from Amanda Wang, Andreea Papuc and Yakob Peterseil.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

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