Markets rise on hopes trade war receding

By Randall Jensen

Global stocks rose yesterday, while US Treasuries pared gains as signs mounted that US president Donald Trump could be dissuaded from enacting tariffs that may spark a trade war.

The S&P 500 pushed to near its highs for the session after Senator Sonny Perdue suggested Trump is open to changes on his position. The comments add to pressure from the president’s allies, including House Speaker Paul Ryan and White House economic adviser Gary Cohn.

Investors remained focused on the potential for severe protectionist policies from the Trump administration, while an apparent diplomatic breakthrough on the Korean Peninsula added to optimism.

“What’s got us all in a tizzy is clearly the tariffs,” Ryan Detrick, senior market strategist at LPL Financial, said.

“Every hour, we have a different voice come out and voice some displeasure or back it up. And the bottom line is the market really doesn’t like uncertainty,” he said.

Meanwhile, emerging-market stocks rose after five days of declines, and Europe’s peripheral bonds advanced. Italian stocks advanced with bonds as the potentially lengthy process of forming a new government got underway.

And the chances of a Qualcomm takeover appeared to dim as the US warned over security risks. Broadcom’s hostile takeover attempt of chipmaker Qualcomm could pose a national security risk because of Qualcomm’s leadership in developing critical semiconductor technology, said the US Treasury Department, setting up a potentially insurmountable hurdle to getting a deal done.

Qualcomm’s sale to Singapore-based Broadcom could hurt the chipmaker’s competitiveness by reducing research and development, which would threaten US security, the Treasury said in a letter released by Qualcomm. Harm to Qualcomm’s innovation would allow China to expand its influence in key wireless technology, the US said.

The US “has identified potential national security concerns that warrant a full investigation of the proposed transaction,” the US Treasury said. Qualcomm has postponed a shareholder vote on Broadcom’s nominees for Qualcomm’s board after the Committee on Foreign Investment in the US, which the Treasury leads, ordered a delay to review the deal.

Bloomberg


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