Global stocks surged after Trump cancels Mexico tariffs and Asian countries reported better than expected economic data. President Trump’s cancellation of planned tariffs on Mexican imports tempered fears of another trade war, sparking a relief rally in Asian and European stocks and US futures on Monday, positioning Wall Street to build on its best week of the year to date.
Meanwhile, Group of 20 finance leaders on Sunday vowed to protect global growth from disruptions such as trade tensions. During a sideline meeting, U.S. Treasury Secretary Steven Mnuchin had a “candid” and “constructive” talk with People’s Bank of China Governor Yi Gang, the secretary tweeted Sunday.
But trade troubles between the US and China appeared to be simmering away. Beijing cautioned global technology companies in a meeting last week that complying with a ban on Huawei Technologies would mean sector-wide complications, Reuters reported. Data Monday showed that China exports grew slightly in May, though imports fell sharply.
Asian markets recap
The main stocks indexes on the Asia-Pacific ended the first session of the week into the green territory after Chinese trade surplus data for May exceeded analysts’ expectations, and last week, the US President Donald Trump said he would not impose customs duties on Mexico’s imports.
In China, the mainland index Shanghai Composite advanced by 0.84% to 2,851.56 points. In Hong Kong, Hang Seng added 582.29 points, or 2.16%, to its value, ending at 27,547.57 points. Chinese export unexpectedly returns to growth in May, despite the higher duties the US has imposed on the largest Asian economy, but imports have seen their most significant decline in nearly three years amid a weak domestic demand that may force Beijing to resort again to financial incentives. Chinese exports in May rose by 1.1% year-on-year, compared to market analysts’ expectations for a slight decrease. China’s trade surplus against the United States rose to a 4-week high to 26.89 billion USD in May from 21.01 billion USD in April, according to data. For the January-May period, total Chinese exports grew by only 0.4% YoY, while imports fell by 3.7%.
In Japan, the blue-chip index Nikkei 225 rose by 249.71 points, or 1.20%, to 21,134.42 points. The main driver for the index and companies was the data on Japanese GDP, which grew at an annual rate of 2.2% in the January-March period, marking a second consecutive quarter of growth despite weak consumer spending. The data coincide with analysts’ forecasts and are slightly adjusted to the rise from the initial estimates of the growth of 2.1%. Capital expenditures rose by 0.3% on a quarterly basis, reversing the original contraction data by 0.3% after growth by 2.7 % in the October-December period.
In South Korea, the index Kospi gained 1.31% to 2,099.49 points. The stocks of the chipmaker SK Hynix added about 1.5% to its value.
Shares of Kia Motors rose by more than 4%, while those of Toyota and Nissan in Japan added 1.56% and 0.96%, respectively, after it became clear that the US would not impose customs duties on Mexican imports.
Stock Exchange in Australia is closed today for a national holiday.
European markets mid-session recap
European stocks edged higher on Monday amid continuing trade hopes. The pan-European STOXX Europe 600 gained 0.15% to 378.02 points at 14:05 GMT.
French index CAC 40 is up by 14.93 points, or 0.28%, to 5,378.98 points. The stocks of carmakers Renault and Peugeot added 3.0% and 1.9%, respectively. Financial stocks are also higher with Societe Generale adding 1.2% and BNP Paribas growing by 2.1%. However, the shares of the aircraft manufacturer Airbus are down by 0.3%.
British index FTSE 100 rose by 0.5% to 7,368.66 points at mid-session trading. The UK manufacturing industry reported its biggest decline in nearly 17 years in April as it stopped stockpiling for Brexit, and carmakers have cut jobs. The decrease in production reached 3.9%, the biggest decline since June 2002, and contributed to shrinking the economy for the second month in a row, the Bureau for National Statistics reported. Vehicle production has declined by a quarter. The country’s gross domestic product declined by 0.4% – most since March 2016, leaving the economy at risk of a sharp slowdown this quarter. In the first months of 2019, factories performed well as companies stocked goods to avoid supply disruptions before the UK’s initial exit deadline of 29 March. But by postponing Brexit by October, orders are diminishing, and demand is met by goods stacked in warehouses.
German markets are off today.
Wall Stree early-session recap
The US stocks rose on Monday, buoyed by relief over the White House dropping a threat to hit Mexico with tariffs on billions of dollars of goods.
The Dow Jones Industrial Average gained 156 points, or 0.5%, to 26,140.38 points shortly after the opening bell. The S&P 500 added 0.65% and the Nasdaq Composite advanced 1.45%.
The technology companies are performing particularly strong with Facebook, Apple and Google’s parent Alphabet Inc, added more than 1%, while Amazon gained 3.2%. The gain comes amid the decision of the billionaire investor Warren Buffett to include Amazon stocks in his portfolio.