FYI: Global stocks rallied Friday in the wake of Washington’s decision to impose higher tariffs on China, and Beijing’s promise to retaliate, as investors pinned hopes on the continuing dialogue between the two nations.
After news of the tariff increase came at midnight Friday eastern time, Asian markets rallied, with the Shanghai Composite Index closing 3.1% higher. Hong Kong’s Hang Seng closed 0.8% up, although both indexes closed out the week with losses of more than 4.5%.
Meanwhile, U.S. futures pointed to a tepid opening, with the S&P 500 and the Dow Jones Industrial Average both set to decline 0.3% and 0.2% respectively at the market open. Shares in tech giant Apple —whose supply chain is heavily dependent on China—were down 0.7% in premarket trading.
President Trump allowed the levy on $200 billion of Chinese goods to rise to 25%. Washington enforced that increase after U.S. and Chinese negotiators met Thursday in hopes of jump-starting stalled trade talks. With negotiations set to continue Friday, both sides have in recent days traded accusations of reneging on agreements and threatened retaliation.
In Europe, the Stoxx 600 was up 0.7% in morning trading, the day after its sharpest daily drop in 2019. The Stoxx’s basic resources and technology—both of which are heavily exposed to international trade and emerging markets—were up by more than 1%.
Investors were searching for explanations for Friday’s rally.
The Chinese yuan was up 0.1% against the U.S. dollar, although it remained 1.3% lower so far this week. One of the key U.S. demands in negotiations has been that China implements volatility controls on its currency.
The WSJ Dollar Index was down 0.1%, eroding its five-day gains to the same percentage. The yield on 10-year U.S. Treasurys was at its late-Thursday level of 2.452%, after 10-year yields dropped below 3-month yields for the first time since March.
In commodities, Brent crude oil futures were up 0.8% at $70.95 a barrel—wiping out their week-to-date losses—while copper futures were also up 0.3% at $6,162 a metric ton, after coming under trade-related growth fears earlier in the week.
Regards,
Ted
MarketWatch:
https://www.marketwatch.com/story/us-stock-futures-ease-as-higher-tariffs-on-china-imports-kick-in-2019-05-10/printWSJ:
Bloomberg:
https://www.bloomberg.com/news/articles/2019-05-09/asia-stocks-seen-mixed-ahead-of-tariff-deadline-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-stock-market-rally-trump-china-trade-decision/Reuters:
https://www.reuters.com/article/us-usa-stocks/stocks-futures-subdued-as-trade-deal-hopes-offset-new-china-tariffs-idUSKCN1SG13FCNBC:
https://www.cnbc.com/2019/05/10/us-markets-as-higher-tariffs-on-chinese-goods-kick-in.htmlU.K.:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-gains-on-hope-for-trade-deal-strong-gdp-boosts-midcaps-idUKKCN1SG0NKEurope:
https://www.reuters.com/article/us-europe-stocks/european-shares-bounce-from-six-week-lows-on-hopes-of-a-trade-deal-idUSKCN1SG0SCAsia:
https://www.marketwatch.com/story/asian-markets-mostly-gain-despite-looming-us-tariff-hikes-targeting-chinese-goods-2019-05-09/printBonds:
https://www.cnbc.com/2019/05/10/us-bonds-increased-tariffs-on-china-kick-in.htmlCurrencies:
https://www.cnbc.com/2019/05/10/forex-market-us-china-trade-tariffs-in-focus.htmlOil:
https://www.cnbc.com/2019/05/10/oil-market-us-china-trade-opec-supply-cuts-in-focus.htmlGold:
https://www.cnbc.com/2019/05/10/gold-market-us-china-trade-talks-tariff-threats-in-focus.htmlCuirrent Futures:
https://finviz.com/futures.ashx 
