Anticipation. The three main U.S. stock indexes rose on Thursday as the high-level trade talks between the U.S. and China kicked off in Washington. President Donald Trump said he plans to meet with Chinese Vice-Premier Liu He tomorrow, while Liu said China is willing to reach an agreement to prevent further escalation in the trade tension. U.S. consumer prices were flat last month, and Treasury yields rose. Fidelity Investments is finally slashing equity commissions to zero, joining other discount brokers that made the move last week. In today’s After the Bell, we…
- wait for tomorrow’s meeting between Trump and China’s chief trade negotiator;
- check on the latest inflation data and what it means for the Fed;
- and watch the British pound jump as Brexit hopes lighten up again.
Trade on Tap
Stocks closed with gains on Thursday, as investors kept watching the latest round of trade talks between the U.S. and China. Sentiment was positive so far. The Dow Jones Industrial Average rose 150.66 points, or 0.57%, to close at 26,496.67. The S&P 500 added 18.73 points, or 0.64%, to 2938.13, and the Nasdaq Composite increased 47.04 points, or 0.60%, to close at 7950.78.
President Trump will meet China’s Liu at White House tomorrow. Headlines have been floating around that China is open to a partial trade deal, and it has been purchasing more American agriculture products lately to avoid further tariffs on its exports to the U.S.
On hopes of stronger demand from China, along with a report from the U.S. Department of Agriculture that production is expected to drop, soybean prices climbed on Thursday and settled at the highest level in nearly three months.
Still, with elevating tension over Hong Kong’s anti-Communist protest and the human rights abuse of Uyghur minority in the Xinjiang region, the overall relationship between the two countries remains opaque.
The consumer-price index was flat in September, slightly below economists’ consensus for 0.1% growth. The data followed Tuesday’s report on wholesale prices, which unexpectedly contracted last month and posted the biggest decline in eight months.
The weak readings in both inflation reports are likely to boost investors’ expectations for an October Fed rate cut. The minutes from the Federal Reserve’s September meeting—released on Wednesday—suggest that central bank officials were concerned about slowing global growth and rising trade-policy uncertainty.
Still, in a Thursday blog post, Dallas Fed President Robert Kaplan wrote that after the past two rate cuts, he intends to take some time to “carefully monitor economic developments” as to whether further action on the federal-funds rate is appropriate, and avoid being “rigid or predetermined.”
“I am mindful of the potential excesses and imbalances that can be created as a result of excessive accommodation,” wrote Kaplan, “I am also alert to the possibility that recent escalations in trade tensions could moderate somewhat and this, in turn, might alleviate some of the downside risks to the U.S. and global economies.”
On the other side of the ocean, British pound rallied nearly 2% against the U.S. dollar after U.K. Prime Minister Boris Johnson and Irish leader Leo Varadkar said that there could still be a pathway toward a Brexit deal—and hence an orderly exit of the U.K. from the European Union.
“A deal, which leads to a well-managed departure, is likely to have a rebound effect on global equity markets, whilst the pound and euro would strengthen against the dollar,” wrote Nigel Green of deVere Group on Thursday, “There is a growing sense that there’s a light in what has been a very dark tunnel. It is now imperative that the leaders of the EU and the U.K. use this glimmer of hope and move forward to end the paralysis.”
Write to Evie Liu at firstname.lastname@example.org