Stocks claw way back as trade tensions continue to haunt Wall Street

Stocks in Europe plummeted and clawed their way back on Wall Street as investors sought safer assets in the wake of a range of global trade tensions and a drop in commodity prices.

Uncertainty surrounds a US agreement with China over telecom giant ZTE and reports that talks to renegotiate the North American Free Trade Agreement have reached a stalemate.

The US Senate banking committee approved legislation to tighten national-security reviews of Chinese technology companies, strengthen export controls and prohibit the Trump administration from lifting stiff penalties imposed on ZTE

“[Trade] risk is going to be more impactful to the market than others because this does directly impact the economy,” says Katie Nixon, chief investment officer at Northern Trust Wealth Management.

“You’ll continue to see market moves ebb and flow with trade news, whether it’s the US and Europe over steel and aluminium tariffs or with China.”

Oil prices fall
Oil prices fell amid signs producers could decide to ramp up output at Opec’s next official meeting in June

US crude futures fell1%, to settle at $US71.48 a barrel, while Brent, the global benchmark, fell 0.85%, to $US78.89.

The yield on the benchmark 10-year US treasury note fell to 3.003% from 3.065% on Tuesday.

Investors were also weighing minutes from the US Federal Reserve’s last meeting that showed officials signalled they were likely to raise the benchmark short-term interest rate at their June meeting, as expected.

If the economy performs as expected, “it would likely soon be appropriate for the committee to take another step” in raising rates, the minutes revealed.

The Fed held its benchmark federal-funds rate steady at the May meeting in a range between 1.5% and 1.75% but it looked ahead to future increases that might leave policy at a neutral level that neither spurs nor slows growth.

Dow recovers in mixed session
On Wall Street, the Dow Jones Industrial Average traded in the red for most of the session, with a bounce back toward the end as the Fed minutes release allayed fears of an imminent interest rate rise.

The Dow closed up 52.40 points, or 0.2%, to 24,886.81. The S&P 500 rose 0.3% at 2733.29 and the Nasdaq Composite gained 0.6% to 7425.96.

Among individual stocks, retailers Tiffany, Ralph Lauren and Lowe’s were among the best performers in the S&P 500 following their latest earnings reports while Target was among the biggest laggards after the retailer said higher spending pinched profit margins.

Shares in DIY chain Lowe’s rose 10.5% as William Ackman’s Pershing Square Capital Management joined another activist investor after a change in chief executive.

Pershing Square has built a stake valued at about $US1 billion and is said to be supportive of Marvin Ellison, who during 12 years at rival Home Depot was credited with improving customer service and expanding its professional business.

The appointment of Mr.Ellison to the top job at Lowe’s was announced on Tuesday. He was previously chief executive at struggling retailer J.C. Penney. Lowe’s has a market value of $US77.7 billion on Wednesday afternoon.

Comcast raises Fox bid
In other corporate news, cable giant Comcast said it was in advanced stages of preparing a higher, all-cash offer for the assets of 21st Century Fox that Walt Disney has agreed to buy.

Comcast is putting heat on Fox shareholders to consider the higher cash alternative. Comcast shares rose 1.7% while Disney fell 0.9%.

The Stoxx Europe 600 fell 1.1%. The auto sector, often seen as a potential target in trade spats, was among the biggest decliners. The euro fell 0.7% against the dollar.

France’s CAC 40 fell 1.3%, Germany’s DAX dropped 1.5% and the UK’s FTSE 100 was down 1.1%.

Italian stocks also remained under pressure amid concerns the prospective antiestablishment government will stake out anti-euro positions and start a spending binge.

The FTSE MIB Index fell 1.3%, while Italian 10-year government bond yields extended their recent climb.