Wall St shrugs away North Korean threats and Israeli gunfire
Wall Street stocks rose as major players in the US consumer sector registered healthy annual results even as North Korea’s negotiation tactics and Israeli gunfire worries the market.
Macy’s shares surged 11%, hitting a 52-week high after the department store operator reported strong results. The department store exceeded same-store sales expectations in the most recent quarter and lifted its targets for the 2018 fiscal year.
The news boosted the consumer discretionary sector by 0.92%, while the consumer staples index gained 0.72%. Walmart, Nike and Target were also up between 1.4 and 3.2%. Cisco Systems is scheduled to report after the market closes on Wednesday, while Walmart and J.C. Penney are timed for early Thursday.
Macy’s results come a day after strong April US retail sales data showed consumer spending picking up, reigniting inflation worries as investors continue to anticipate three more Federal Reserve interest-rate increases this year compared with the central bank’s previous projection of two.
On Wednesday, the 10-year Treasury yield was flat at 3.082%, according to Tradeweb, a seven-year high. However, Germany’s 10-year yield dipped five basis points to 0.60%, the largest decrease in almost two weeks, while Britain’s 10-year yield declined three basis points to 1.491%.
At market close, the Dow Jones Industrial Average was up 62.52 points, or 0.25%, at 24,768.93, the S&P 500 was up 11.01 points, or 0.41%, at 2722.46 and the Nasdaq Composite was up 46.67 points, or 0.63%, at 7398.30.
The S&P index recorded 13 new 52-week highs and three new lows while the Nasdaq recorded 108 new highs and 39 new lows.
Meanwhile, commercial oil stocks fell to their lowest level in three years, according to the International Energy Agency. Oil inventories for Opec countries declined in March by 26.8 million barrels month-on-month to 2.819 billion barrels, a full one million barrels below the latest five-year average metric.
West Texas Intermediate crude declined 0.6% to $US70.89 a barrel. Brent crude declined 0.7% to $US77.85 a barrel.
The euro fell 0.3% to $US1.1807 amid political uncertainty in Italy and the German chancellor cautioning that the region’s central bank will eventually ease stimulus.
And the WTO issued a final ruling that US airplane maker Boeing was harmed by illegal government subsidies provided to Airbus. The ruling is intended to be the final word in a case that has dragged on for 14 years and comes just months before the WTO is expected to issue another final ruling on a European Union challenge to US subsidies provided to Boeing.
Talking tough tactics
“We haven’t been notified at all,” US President Donald Trump told reporters after news suggested the summit between North Korea and the US wouldn’t go on. “We’ll have to see.”
A statement attributed to the senior North Korean foreign ministry official warned that focusing on denuclearisation would lead Pyongyang to reconsider talks scheduled for June 12 in Singapore.
“If the US is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue,” it reads.
“We will appropriately respond to the Trump administration if it approaches the North Korea-US summit meeting with a truthful intent to improve relations.”
The statement came hours after the North Korean regime cast doubt on the upcoming summit by cancelling today’s scheduled talks with South Korean officials less than 24 hours after agreeing to them, citing frustrations with joint US-South Korean military drills taking place across the border.
The joint US-South Korean exercises involved 100 warplanes and were defended by the US Defence Department as “defensive …[a] routine, annual training programme to maintain a foundation of military readiness.”
“Kim Jong-un had said previously that he understands the need and the utility of the US and the Republic of Korea continuing in its joint exercises,” the State Department spokeswoman Heather Nauert suggested, claiming that “we will continue to go ahead and plan the meeting between President Trump and Kim.”
Chinese foreign ministry spokesman Lu Kang says all parties should demonstrate goodwill and sincerity to create a helpful atmosphere for denuclearisation on the Korean Peninsula.
Nevertheless, commercial satellite imagery indicates North Korea has started to remove some structures around its Punggye-ri nuclear test site but some analysts are concerned that the dismantling of the surface-level support structures does not go far enough towards complete permanent denuclearisation.
Israel is facing international condemnation for its response to protests at its border fence with Gaza and the killing of 60 Palestinians.
Israeli forces used live gunfire against protestors gathering at the fence on Monday, which coincided with the opening ceremony of the US embassy in the city of Jerusalem and ahead of the day that Palestinians mark as the “Nakba,” or “catastrophe,” commemorating the mass displacement of Palestinians at the time of Israel’s creation 70 years ago.
The UN Security Council convened for an emergency meeting yesterday to discuss the violence, senior UN officials and ambassadors from foreign countries, including US allies, strongly criticised Israel for its disproportionate use of force and the US for failing to call for Israel to exercise restraint.
Kuwait has said it would circulate a resolution today condemning the killings, the US is expected to veto the resolution. The Palestinian envoy to the UN called the killings a “crime against humanity” while the Israeli ambassador said the protestors were incited by the Palestinian Hamas terrorist group.
“No one would. No country in this chamber would act with more restraint than Israel has,” the US ambassador to the UN Nikki Haley told the meeting, blaming Hamas for inciting violence and defended the US decision to relocate its embassy to Jerusalem. Ms Haley walked out of the council before the Palestinian envoy spoke.
Malaysia’s newly elected Prime Minister Mahathir Mohamad took a step closer to achieving his campaign pledges.
He will discard a 6% rate on the country’s GST from June 1, according to a statement by the Ministry of Finance. The government is expected to replace the tax with a sales-and-service levy which is likely to cut government income but mollify disgruntled voters who blamed the GST on rising living costs since it was imposed in 2015.
“It’s good and bad. If it’s just the GST, of course, the budget deficit will widen. But I’m hopeful that they will take compensating measures that will ease the pain,” says Sanjay Mathur, an economist at ANZ in Singapore.