According to the news report by Bloomberg, the equity markets across the globe gained on Tuesday, despite the increasing acrimonious trade war between the US and China. Treasury yields fell and the price of oil went up once again.
The S&P 500 Index gained the most during intraday trading in the last 3 weeks. This happened despite the fact that China announced that it was going to impose levies on $60 billion worth of goods after the US imposed fresh tariffs on Chinese goods.
The constantly spiraling trade war between the two economies is affecting stock markets now, however, experts still feel it will take at least a few more months before it affects the markets the way investors are fearing.
After the announcement by the US about Trump’s government imposing further tariffs, Asian stocks dropped in early trading. However, after the early losses, benchmarks in Japan as well as Shanghai shooting up.
The STOXX Europe 600 also fell in initial trading but bounced back during the day after China responded to Trump’s tariffs.
According to the chief investment officer of Independent Advisor Alliance, Chris Zaccarelli, the US President seems to have decided to increase the pressure on China. He said that the markets were fearing that Trump was going to impose another 25% in tariffs, but the fact that he imposed only 10% may indicate that it is less of a threat than markets thought.
He also stated that the China show a great deal of restraint in not responding in the same way that the US government has by imposing taxes on $200 billion worth of Chinese goods. He said that China was not matching the US dollar-for dollar.
Since the tit-for-tat trade war has been going on for months now, many assets have already built in a buffer for rising trade tensions in their prices, thereby mitigating the effects of this dispute somewhat.
Treasuries in the US declined, because of which the yield on the 10-year US bonds went up over the dreaded 3% mark. However, bonds across the rest of Europe fell.
Italy’s debt fell after a report was released revealing increasing tension over the country’s upcoming budget. However, once the country’s Finance Minister Giovanni Tria outlined his fiscal plan, things stabilized.
Technology stocks, which had suffered badly during Monday’s trading, soared on Tuesday, thereby pushing up the stock market. Thus, the S&P 500 went up by 0.6% during trading. The STOXX Europe 600 also went up by 0.1%. The FTSE in London went up by 0.05% and the MSCI Emerging Markets Index went up by 0.2%.
In currencies, the Bloomberg dollar index went up by 0.1%. However, the Euro lost some ground, going down by 0.2% to trade at $1.1657. The British pound also lost some value, dropping by 0.2% to trade for the day at $1.3136. The Japanese Yen also declined, slipping 0.4% to trade at ¥112.31 to the dollar. This is the weakest that the Yen has been in almost two months.
In the bonds markets, the yield on the US 10-year Treasuries went up 5 basis points to close at 3.05%, which is the highest the yield has been in nearly four months. The German 10-year bonds’ yields went up by 2 basis points to 0.48%, which is the highest they have been in the last 14 weeks. The UK’s 10-year yields went up by 3 basis points to 1.568%.
In the commodities’ market, the price of oil in the US benchmark, West Texas Intermediate, went up by 1.2% to trade at $69.77 per barrel. Gold dropped by 0.3% to trade at $1,198.32 per ounce.