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While you were sleeping: Wall St awaits Trump tariff announcement

Friday 9th March 2018

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Wall Street was mixed as it awaited an update about US President Donald Trump’s plans to impose tariffs on steel and aluminum imports that would prompt a global move towards protectionism. 

Trump will sign the formal proclamations on the tariffs at 3.30pm in Washington, the White House said in an emailed statement, Bloomberg reported. 

“Looking forward to 3:30 P.M. meeting today at the White House,” Trump tweeted on Thursday. “We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.”

In 1.29pm trading in New York, the Dow Jones Industrial Average fell 0.3 percent. However, the Nasdaq Composite Index rose 0.1 percent. In 1.14pm trading, the Standard & Poor’s 500 Index eked out a 0.02 percent gain.

US Treasuries advanced, sending the yield on the 10-year note three basis points lower to 2.85 percent.

“A lot of the same headlines seem to be getting recycled on daily basis—the tariffs and the concerns about protectionism, global trade war. It depends who says what over night, and what is hitting Twitter,” Paul Powers, head of US and European sales trading at Raymond James, told Bloomberg. 

“You have some people concerned that they’re going to be put in place, then you get a headline overnight talking about countries that might receive exemptions,” according to Powers. “So people take some solace there and you see some move to the upside.”

The Dow moved lower as declines in shares of IBM and those of Chevron, down 1.3 percent and 0.8 percent respectively recently, outweighed gains in shares of Johnson & Johnson and those of Coca-Cola, recently up 1.3 percent and 1.1 percent respectively.

“As has been in the past, what President Trump says and what finally actually materialises are two different things,” Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, told Reuters. “It might be just wise to sit on the sidelines before we get some more clarity.”

Meanwhile, Shares of Kroger dropped as the US grocery-store chain reported a decline in margins and offered an outlook that disappointed investors amid increased competition in the industry.

The company reported a decline in gross margin, which fell 31 basis points in the fourth quarter from the same period a year earlier.

Kroger is targeting identical supermarket sales growth, excluding fuel, to range from 1.5 percent to 2.0 percent in 2018, and expects net earnings to range from US$1.95 to US$2.15 per diluted share for the year, the company said in a statement. Fiscal 2017 net earnings were US$2.09 per diluted share and identical supermarket sales growth, without fuel, was 0.7 percent, it said.

“External pressures continue to weigh on the fundamentals—particularly the heightened competition from Walmart, Amazon-Whole Foods, Aldi, Lidl, and others—resulting in ongoing reinvestment in the business, which has been pressuring results,” Telsey Advisory Group analyst Joseph Feldman said in a client note, Reuters reported. 

The stock traded 12.7 percent weaker as of 12.23pm in New York.

In the latest takeover deals, Shares of Cigna sank, down 11.5 percent in 1.36pm trading in New York, after the US health insurer agreed to by pharmacy benefits manager Express Scripts in a US$52 billion deal.

Shares of Express Scripts jumped, trading 8.4 percent stronger as of 12.37pm.

In Europe, the Stoxx 600 Index finished the day with a 1.1 percent rally from the previous close. The UK’s FTSE 100 index gained 0.6 percent, while Germany’s DAX Index rose 0.9 percent, and France’s CAC40 Index rallied 1.3 percent.

In a surprise move, the European Central Bank removed a reference to the potential of increasing the size or duration of its bond buying if needed. 

"Incoming information, including our new staff projections, confirms the strong and broad-based growth momentum in the euro area economy, which is projected to expand in the near term at a somewhat faster pace than previously expected," ECB President Mario Dragh said in a statement at the end of the central bank's meeting. 

"This outlook for growth confirms our confidence that inflation will converge towards our inflation aim of below, but close to, 2 percent over the medium term," Draghi noted. "At the same time, measures of underlying inflation remain subdued and have yet to show convincing signs of a sustained upward trend." 


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