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While you were sleeping: US Treasuries gain, Wall St mixed

Thursday 15th March 2018

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US Treasuries gained while Wall Street was mixed amid concern about rising odds of a global trade war prompted by US President Donald Trump’s moves towards protectionism.

Trump is seeking to impose tariffs on up to US$60 billion of Chinese imports and will target the technology and telecommunications sectors, two people who had discussed the issue with the Trump administration said on Tuesday, Reuters reported.

“We’ve gone a long time with a zero percent chance of a trade war, it’s now higher than that—probably significantly higher than that,” Matt Maley, a Miller Tabak equity strategist, told Bloomberg. “The internationalists have lost and the nationalists have won.”

In 1.36pm trading in New York, the Dow Jones Industrial Average dropped 0.8 percent. However, the Nasdaq Composite Index eked out a 0.02 percent gain. In 1.21pm trading, the Standard & Poor’s 500 Index slid 0.6 percent.

“When you raise tariffs, it raises the costs of the products that are coming in,” Maley said. “It might help the domestic producers over the longer-term, but near-term it raises prices. Trade wars are inflationary.”

Meanwhile, Trump has offered Lawrence Kudlow the job as director of the National Economic Council and he accepted, making the economic commentator one of the president’s top economic advisers, Kudlow said in an interview, the Wall Street Journal reported. The appointment could be announced on Thursday, Kudlow said, according to the Journal. 

The Dow fell as declines in shares of Boeing and those of DowDuPont, down 2.4 percent and 2.1 percent respectively recently, outweighed gains in shares of Cisco and those of Walt Disney, recently each up 0.3 percent.

US Treasuries rose, pushing the yield on the 10-year note three basis points lower to 2.81 percent.

Shares of Walmart fell as the company said it plans to expand its US online grocery delivery service to more than 100 metro areas across the country, up from six cities currently, making it available to more than 40 percent of the nation's households by the end of the year. 

Deliveries will cost US$9.95 with a minimum US$30 order, the company said in a statement.

The stock traded 0.7 percent weaker as of 12.49pm in New York.

“It is an absolutely necessary step for them to take in terms of their ability to compete with Amazon in particular,” said Ken Perkins, founder of research firm Retail Metrics, according to Reuters. 

Shares of Kohl’s and Macy’s fell after a Commerce Department report showed US retail sales fell 0.1 percent in February, posting its third consecutive monthly drop. 

Separately, a Labour Department report showed its producer price index rose 0.2 percent in February from the previous month, while it gained 2.8 percent from the same month a year earlier. 

In Europe, the Stoxx 600 Index declined 0.6 percent. The UK’s FTSE 100 index slipped 0.1 percent, while France’s CAC40 Index fell 0.2 percent.

Shares of Unilever closed 0.4 percent weaker in Amsterdam. Anglo-Dutch Unilever, the third-largest company in the FTSE 100 Index, is set to axe its UK headquarters and consolidate its legal base in the Netherlands, Sky News reported.

Directors of Unilever's dual British and Dutch holding companies are meeting in the coming hours to finalise the landmark decision, and an announcement will be made on Thursday, or possibly late on Wednesday, according Sky News, citing unnamed sources who cautioned that the formal verdict had not yet been rubber-stamped by Unilever's boards.

Ministers, including Theresa May, have been briefed on the impending decision to unify under a sole headquarters in Rotterdam, which will represent a major blow to the government, according to Sky News. 

Bucking the trend, Germany’s DAX Index rose 0.1 percent, bolstered by an 8.9 percent gain in Adidas shares following better-than-expected results and an upbeat earnings outlook. 


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