Wall Street erased early declines and government bonds trimmed some of their gains on Wednesday as President Donald Trump delayed imposing tariffs on auto imports by up to six months.
The S&P 500, which fell as much as 0.7 per cent in morning trade, closed 0.6 per cent higher. The Dow Jones Industrial Average was up 0.5 per cent, while the Nasdaq Composite jumped 1.1 per cent amid strong gains in technology shares.
News the Trump administration will delay levies on auto imports in a move to avoid an immediate clash with the EU and Japan on trade revved up US and European carmaker shares and helped bolster markets.
Remarks by US Treasury secretary Steven Mnuchin also helped ease trade worries on Wall Street. During Senate testimony, Mr Mnuchin said, “I think we are close to an understanding with Mexico and Canada” on resolving steel and aluminium tariffs.
Developments on the trade front overshadowed a weak batch of economic data that weighed on US stocks early in the session. Retail sales fell and industrial production unexpectedly declined, with both reports adding to angst about the fallout from the US-China trade war.
In Europe, the region-wide Stoxx 600 was up 0.5 per cent, erasing losses of as much as 0.7 per cent when metal stocks had weighed on the index. The FTSE 100 was up 0.8 per cent.
Demand for the relative safety of sovereign debt pushed yields on eurozone and US bonds lower. Short-dated yields in the US slid to their lowest level in more than a year earlier in the session, with both the two-year and 10-year about 5 basis points lower. However, they later trimmed their decline with the yield on the 10-year down 4.7 basis points to 2.3715 per cent.
Germany’s benchmark 10-year Bund yield fell to it lowest in more than two years, at minus 0.124 per cent but at pixel time was down to minus 0.105 per cent.
Overnight, China published retail sales and industrial production data, which missed forecasts, although stock indices there rose. The gains in Shanghai and Shenzhen stuck on hopes that stimulus measures from Beijing could brighten the outlook there. The CSI 300 rose by over 2 per cent.
Sterling got caught up in the move away from risk as the UK’s cross-party talks designed to agree a parliamentary majority for a deal on the terms of Brexit faltered. The pound hit its lowest level since February at $1.2827 but by pixel time was down 0.5 per cent at $1.2842.
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