Stocks on world markets edged higher yesterday, recovering from a recent selloff on rapidly escalating China-US trade tensions, while Treasury yields rose after the Federal Reserve chairman said the US central bank should continue with a gradual pace of interest rate increases.
Fed Chairman Jerome Powell said the pace should stay the same, given the labour market did not seem to be overly tight.
The S&P 500 edged higher along with the Nasdaq, with technology shares providing support.
“A lot of people believe the track that the [US] President is taking is a negotiation tactic. And the people who still think the trade war will develop believe it would be China that comes to the table with concessions first,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.
The Dow Jones Industrial Average erased its year-to-date gains on Tuesday after President Donald Trump’s latest tariff threats against Chinese goods.
The Dow Jones Industrial Average fell 44.72 points, or 0.18 per cent, the S&P 500 gained 6.34 points, or 0.23 per cent, and the Nasdaq Composite added 55.39 points, or 0.72 per cent.
The pan-European FTSEurofirst 300 index rose by 0.46 per cent and MSCI’s gauge of stocks across the globe gained 0.41 per cent. MSCI’s broadest index of Asia-Pacific shares outside of Japan closed higher by 0.72 per cent , while shares in Hong Kong, Seoul and mainland Chinese indexes also rose.
Helping those shares was a State radio report that China will use targeted cuts in banks’ reserve requirement ratios and other monetary policy tools to boost credit for small firms.
Mr Powell’s comments boosted yields in the US Treasury market.
Benchmark 10-year notes last fell 5/32 in price to yield 2.9114 per cent, from 2.893 per cent late on Tuesday. Before Mr Powell's remarks, US yields had been little changed.
The euro held slim losses against the dollar as European Central Bank President Mario Draghi said the factors holding back local wages were subsiding and the ECB is confident inflation in the eurozone would move toward its two per cent goal.
The dollar index fell 0.09 per cent, with the euro down 0.03 per cent to $1.1585.
In commodities markets, copper prices eased again after an inventory rise highlighted healthy supplies, extending declines from Tuesday tied to trade war worries.
Copper lost 0.94 per cent to $6,776.00 a tonne. US crude rose 1.63 per cent to $66.13 per barrel, and Brent was last at $75.19, up 0.15 per cent.