Stock traders on Wall Street largely ignored the looming D-Day for a new round in the global tariff war.
This despite more apparent signs of a slowdown in world trade, with business surveys published this week showing growth is at a crawl, helping to drive sharp stockmarket drops in Asia.
On Wall Street, investors focused on more positive news about the US economy and the Labor Department’s pending monthly report on the jobs market.
The Dow Jones Industrial Average gained 181.92 points, or 0.75%, to 24,356.74. The S&P 500 rose 0.9% to 2736.61 and the Nasdaq Composite added 1.1% to 7586.43.
Major indexes dipped briefly and then recovered after minutes from the Federal Reserve’s latest meeting revealed growing unease with how trade policy could hold back business investment.
The Fed said some business contacts had scaled back or shelved plans for new investments in the face of uncertain trade policy changes.
Chip maker Micron Technology added 2.1% after its shares suffered on Tuesday as a Chinese court barred it from selling a range of products in China.
Auto stocks rise
Shares of General Motors gained 1%, and Ford rose 0.5% after a report that the US proposed to stop threatening to impose tariffs on cars imported from the EU if duties were removed on US car imports.
Support came from German Chancellor Angela Merkel but analysts said this outcome was unlikely given it would require agreement by all EU members as well as be a violation of World Trade Organisation rules.
These bar countries from signing bilateral deals covering only specific sectors.
The EU started negotiating a “cars-for-cheese” trade deal with Japan as far back as 2013 but has yet to take effect. It will remove tariffs on Japanese car imports to Europe over a period of seven years.
Transatlantic duties on cars have been unchanged for decades. The US charges 2.5% on passenger car imports and 25% on pickup trucks and vans. The EU charges 10% on both.
The Trump administration is threatening import duties of 20-25% on European automotive products on national-security grounds, putting more than $US50 billion worth of European imports at risk.
Job market predictions
Back on Wall Street, Athena Capital managing director Doug Cohen said the market may prefer a jobs number that is below expectations.
“If we see a modest slowdown in job growth and even a slight tick up in unemployment, the equity market would probably like that because it increases the odds of the Fed maybe only going one more time this year rather than two times,” he says.
New data show US employers hired fewer than expected workers in June, Companies added 177,000 workers last month, below the 185,000 forecast by economists surveyed by the Wall Street Journal.
Meanwhile, the bond market was steady with the 10-year Treasury yield remained unchanged from Tuesday at 2.833% and following the July 4 holiday.
Oil prices drop
Oil prices fell after data showed US inventories increased unexpectedly last week.
US crude for August delivery declined 1% to $US73.42 a barrel, while Brent crude, the global benchmark, edged down 0.1% to $US78.14 a barrel.
Elsewhere, the Stoxx Europe 600 closed up 0.4%. Germany’s DAX jumped 1.2% as auto stocks soared 5% after news of a meeting between the US ambassador to Germany and the heads of the big three German manufacturers.
France’s CAC 40 added 0.9% and the UK’s FTSE 100 rose 0.4%
In Asia, Japan’s Nikkei Stock Average fell 0.8%, Hong Kong’s Hang Seng Index shed 0.2% and China’s Shanghai Composite dropped 0.9%.
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