Stocks Rise on Speculation Trade Threat Is Easing: Markets Wrap

Ryan urges Trump to reconsider tariffs; West Texas crude gains

Loonie declines; Italian assets drop on inconclusive election

Rupert Watson, head of asset allocation at Mercer, discusses possible market contagion in equities and bonds.

U.S. stocks rose with the dollar, while Treasuries fell as signs mounted that President Donald Trump’s tough tariff talk may not translate into the most severe protectionist policies.

The Dow Jones Industrial Average added more than 300 points as megacaps that bore the brunt of the selling late last week led gains, while domestically-focused small caps lagged behind. The S&P 500 Index advanced for a second day after hedge fund billionaire Ray Dalio called the threat of a trade war “political show” and House Speaker Paul Ryan urged the president to reconsider tariffs on steel and aluminum. Trump when asked about the congressman’s comment said he won’t back down on trade.

Ten-year Treasury yields advanced toward 2.90 percent, while the greenback rose against most peers with the Canadian dollar leading declines. West Texas crude rose past $62 a barrel.

“The positive story today is the lack of anything bad happening,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, said by phone. “The bad news would have been if [Trump] announced more tariffs, or if there was some kind of reciprocal action from another country.”

Trump’s surprise announcement Thursday that he intends to implement tough tariffs on steel and aluminum imports roiled global financial markets. Trump kept pushing the protectionist stance in a series of tweets, even as leading Republican lawmakers and donors began to publicly question the wisdom of upending the global trading order.

In Europe, the broadest measure of the region’s equities halted a four-day slide after a major breakthrough on the path to a German government. Italy’s stocks and bonds were the standout losers as anti-establishment political groups surged in Sunday’s election.

The Italian election result and Germany’s move toward a coalition kick off a busy week for macro events. Both the Bank of Japan and European Central Bank will meet to decide on interest rate policy, while China hosts its National People’s Congress.

Alessio de Longis, portfolio manager at OppenheimerFunds, discusses the Italian election.

(Bloomberg)

Elsewhere, West Texas oil advanced as geopolitical risk resurfaced, with a halt at Libya’s biggest crude field sparking speculation that supply will tighten and help reduce a global glut.

Terminal users can read more in our markets blog.

Here are some key events coming up this week:

The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20.

The Bank of Japan deputy governors’ confirmation hearings will be held Monday.

Reserve Bank of Australia monetary policy decision on Tuesday, with GDP data due Wednesday.

The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing. 

BOJ monetary policy decision and briefing on Friday.

U.S. monthly payrolls data.

These are the main moves in markets:

Stocks

The S&P 500 Index rose 1.1 percent to 2,720.94 as of 4 p.m. New York time, the biggest gain in a week.

The Stoxx Europe 600 Index increased 1 percent, the first advance in a week.

The MSCI Emerging Market Index fell 0.4 percent with its fifth consecutive decline.

The U.K.’s FTSE 100 Index rose 0.7 percent, its first gain in four days.

Currencies

The Bloomberg Dollar Spot Index gained 0.1 percent, ending a two-day slide.

The euro rose 0.1 percent to $1.2330, its third advance in a row.

The British pound advanced 0.3 percent to $1.3842.

The Japanese yen fell 0.4 percent to 106.19 per dollar.

Bonds

The yield on 10-year Treasuries rose two basis points to 2.88 percent.

Germany’s 10-year yield declined one basis point to 0.64 percent.

Britain’s 10-year yield rose two basis points to 1.495 percent.

Commodities

West Texas Intermediate crude advanced 2.2 percent, the biggest gain in more than a week, to $62.61 a barrel.

Gold fell 0.3 percent to $1,319.20 an ounce.

— With assistance by Kailey Leinz, Sarah Ponczek, and Samuel Potter

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