Wall Street opens mixed as US-China trade talks begin
Wall Street's main indexes are mixed as investors watch a fresh round of US-China negotiations aimed at mending a trade rift that has rattled financial markets for much of the year.
Top officials from both countries have kicked off discussions at London's Lancaster House, looking to address disagreements around a preliminary trade agreement struck last month that had briefly cooled tensions between the world's largest economies.
The meeting, which could run into Tuesday, comes four days after US President Donald Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Trump's January 20 inauguration.
The leaders had, however, left key issues unresolved.
"The talks will have to go on for some time before we decide whether or not there's actual progress being made. However, most investors remain hopeful that there will be some positive results," said Peter Andersen, founder at Andersen Capital Management.
White House economic adviser Kevin Hassett told CNBC in an interview on Monday the US trade negotiators are seeking a handshake in London to seal an agreement struck by Trump and Xi to allow the export of China's rare earth minerals and magnets to the United States.
Hopes of more trade deals between the US and its major trading partners, along with upbeat earnings and tame inflation data, helped US equities rally in May, with the S&P 500 and the tech-heavy Nasdaq notching their best monthly gains since November 2023.
The S&P 500 remains a little more than 2.0 per cent below all-time highs touched in February while the Nasdaq is about 3.0 per cent below its record peaks reached in December.
Major data releases this week include readings on May consumer prices and initial jobless claims.
While investors widely expect the Federal Reserve to keep interest rates unchanged next week, focus will be on any signs of pick-up in inflation as Trump's tariffs risk raising price pressures.
In early trading on Monday, the Dow Jones Industrial Average fell 129.75 points, or 0.30 per cent, to 42,633.12, the S&P 500 lost 0.32 points, or 0.01 per cent, to 6,000.04 and the Nasdaq Composite gained 44.81 points, or 0.23 per cent, to 19,574.76.
Seven of the 11 major S&P 500 sub-sectors fell, with healthcare stocks, down 0.6 per cent, declining the most.
On the flip side, information technology stocks advanced 0.6 per cent.
Most megacap and growth stocks were mixed.
Tesla shares edged 0.5 per cent lower after brokerage Baird downgraded the stock to "neutral".
Nvidia gained 1.3 per cent.
Warner Bros Discovery shares jumped 9.5 per cent, the most on the S&P 500, after the company said it would separate its studios and streaming business from its fading cable television networks.
Robinhood Markets fell 7.4 per cent after S&P Dow Jones Indices left S&P 500 constituents unchanged in its latest rebalancing, following recent speculation that the online brokerage would be added to the benchmark index.
Merck rose 1.1 per cent after the drug maker's oral cholesterol pill succeeded in two late-stage studies.
Advancing issues outnumbered decliners by a 1.65-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq.
The S&P 500 posted 10 new 52-week highs and one new low while the Nasdaq Composite recorded 63 new highs and 27 new lows.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ABC News
34 minutes ago
- ABC News
Albanese should forget Trump's tariff war and prepare for a tax assault
If there was anything remarkable about the explosive split between Elon Musk and Donald Trump, it was that it took five months since the presidential inauguration. First, the uncomfortable scenes in the Oval Office as Musk stood behind the president while son X mocked Trump on camera, an unsubtle hint that Musk saw himself as the presidential puppeteer. Then followed the increasingly unhinged behaviour of the world's richest man, chainsaw held aloft, and his ultimate failure to deliver on the promised savings of his Department of Government Efficiency rampage. And then there was the brutal backlash from consumers for his Tesla cars, all of which pointed to an inevitable demise in the relationship. The sensational personal attacks last week, culminating in Musk highlighting the president's former relationship with the disgraced Jeffrey Epstein, attracted most of the headlines. But the damage to the Trump administration and America's reputation runs far deeper. While a temporary ceasefire in hostilities between the pair has held for several days, Musk's stinging criticisms of Trump's Big Beautiful Bill, a sweeping budget measure that will slash taxes and blow out America's already-strained financial position, has focused attention on the Administration's economic ineptitude. Trump's much-vaunted trade and tariff policy has degenerated into an uncertain and confusing mess that has backfired politically and economically. Rather than shoring up the US economy, its chaotic implementation has only served to slow global growth and, disturbingly, cast doubts about America's role as the centre of international finance. To compensate, the administration has launched a new weapon in its war against the Western alliance. This time, Australia is likely to be a major casualty. They sat there in hallowed territory at the Inauguration right behind the podium, unelected either by the people or the Senate, but in the same exalted territory as Trump's hand-picked cabinet. The four giants of the tech world, modern-day Horsemen of the Apocalypse, the unconventional presence of Elon Musk, Jeff Bezos, Mark Zuckerberg and Sandar Pichai was a statement of power and the power of money. While all the focus of Trump's first 100 days in office has been on trade and tariffs, another T word has quietly loomed large in the background. Tax. Each of the four will benefit hugely from the Big Beautiful Bill, that will slash taxes for the wealthy. But with the failure so far to deliver a coherent policy on trade, the Trump administration is about to shift weaponry in its bid to exact revenge or retaliation on nations it deems treat the US unfairly. High up on that list is Australia. Forget steel, aluminium, beef or even pharmaceuticals. The big beef from American businesses has been the trail-blazing role Australia has taken when it comes to forcing multinationals to pay tax. In the past, it was the big resource groups like Chevron. In more recent times, Australian attention has swung to tech companies like Amazon, Meta — the owner of Facebook and Instagram — and Google. In 2018, Amazon pulled in more than $1 billion in Australian sales but paid less than $20 million in tax. The following year it forked out $100 million to the Australian Tax Office but booked almost $4.8 billion in advertising revenue through its Singapore subsidiary. It's not just Australia's aggressive attitude to tax enforcement either. Australian governments have gone on the front foot demanding the tech giants pay for the journalism they plaster across their search engines and websites, an agreement Mark Zuckerberg recently junked. And don't forget the groundbreaking legislation to protect children under 16 from the excesses of social media, a development the rest of the world is eyeing intently. The tech bros, otherwise known as the broligarchs, aren't impressed. And while Trump may have fallen out of love with Elon, he's mindful of just how much influence the other three carry. It's taken a few days to surface, but buried in Trump's Big Beautiful Bill is a new line of attack on what he deems to be unfriendly nations. Section 899 of the Bill deals with "retaliatory taxation". Companies and investors from "discriminatory foreign countries" buying or investing in the US could be slugged with escalating increases in US federal income tax and withholding tax. The tax penalty will rise by up to 5 per cent a year to a maximum of 20 percentage points above existing treaty rates. That has put Australian super funds and big corporations into a mild state of panic. That's not surprising given our super funds have about $400 billion invested in the US. For the past five years, Wall Street has been the biggest driver of global investment returns as the big tech companies share prices have surged. That's attracted an outsized portion of our superannuation funds. The prospect of increased taxes will thwart those returns into the future. That's a mighty big stick that Trump will hold when dealing with Prime Minister Anthony Albanese when they meet on the sidelines of the G7 meeting in Kananaskis in Canada next week. Musk described the BBB as an "abomination" that will blow a hole in America's weakened budget position. The US Congressional Budget Office estimates the tax cuts, which will overwhelmingly favour the wealthy, will add $US551 billion to the nation's interest bill over the next decade, increasing the cumulative impact on the deficit to $US3 trillion. The interest bill on America's huge $US36 trillion debt already is the nation's second-biggest expense. It outstrips America's massive defence spending and is bested only by social security payments. Musk certainly hasn't helped. As the head of DOGE, he promised to slash $US2 trillion from government spending which would have helped offset the revenue shortfall from the tax cuts. So far, the department claims to have saved $US160 billion but independent investigations indicate much of that claim is undocumented and unverified. Other analysis indicates government spending is now more than 6 per cent higher than this time last year during the Biden administration. Tariffs were also expected to boost revenues and shore up the budget. There is no clear indication of how much they will raise, given negotiations are ongoing. But they also would have reduced profits and curbed demand, slowing growth and pushing up unemployment. In short, rather than reduce the US budget deficit, America's position is set to deteriorate with expanded deficits and increased debt. That has money markets on edge. The US dollar continues to weaken, and market interest rates are again pushing higher, making it more expensive for the US government to borrow. It needs to refinance $US7 trillion in existing debt this year alone and will need to raise new debt to cover its growing deficits. The latest moves, using Section 899 to hit foreigners investing in the US, will only make the task more difficult as foreigners, who invest huge amounts in US government bonds, look elsewhere. Wall Street stock traders have brushed off the concerns, citing the TACO trade. (Trump Always Chickens Out). Money markets have a different philosophy. Sell America.
The Age
40 minutes ago
- The Age
ASX set to rise, Wall Street boosted by US-China talks; $A stronger
US stocks are drifting closer to their records as the world's two largest economies begin talks on trade that could help avoid a recession. The S&P 500 was 0.3 per cent higher in late trading. The Dow Jones was up 93 points, or 0.2 per cent, with an hour remaining in trading, and the Nasdaq composite was 0.5 per cent higher. The Australian sharemarket is set to advance, with futures at 5am AEST pointing to a gain of 16 points, or 0.2 per cent, at the open. The ASX was closed on Monday for the King's birthday public holiday. The Australian dollar strengthened. It was 0.3 per cent higher at 65.25 US cents at 5.13am AEST. Officials from the United States and China are meeting in London to talk about a range of different disputes that are separating them. The hope is that they can eventually reach a deal that will lower each's punishing level of tariffs against the other, which are currently on pause, so that the flow of everything from tiny tech gadgets to enormous machinery can continue. Hopes that President Donald Trump will lower his tariffs after reaching such trade deals with countries around the world have been among the main reasons the S&P 500 has rallied so furiously since dropping roughly 20 per cent from its record two months ago. It's back within 2 per cent of its all-time high, which was set in February, and it's higher than it was before Trump shocked financial markets in April with his wide-ranging tariff announcement on what he called 'Liberation Day.' This may be the shortest sell-off following a shock of heightened volatility on record, according to Parag Thatte, Binky Chadha and other strategists at Deutsche Bank. Typically, stocks take around two months to bottom following a spike in volatility and then another four to five months to recover their losses. This time around, stocks have basically made a round trip in less than two months. But nothing is assured, of course, and that helped keep trading relatively quiet on Wall Street Monday. Loading Some of the market's biggest moves came from the announcement of big buyout deals. Qualcomm rallied 4.4 per cent after saying it agreed to buy Alphawave Semi in a deal valued at $2.4 billion. IonQ, meanwhile, rose 1.6 per cent after the quantum computing and networking company said it agreed to purchase Oxford Ionics for nearly $1.08 billion.
Sydney Morning Herald
43 minutes ago
- Sydney Morning Herald
ASX set to rise, Wall Street boosted by US-China talks; $A stronger
US stocks are drifting closer to their records as the world's two largest economies begin talks on trade that could help avoid a recession. The S&P 500 was 0.3 per cent higher in late trading. The Dow Jones was up 93 points, or 0.2 per cent, with an hour remaining in trading, and the Nasdaq composite was 0.5 per cent higher. The Australian sharemarket is set to advance, with futures at 5am AEST pointing to a gain of 16 points, or 0.2 per cent, at the open. The ASX was closed on Monday for the King's birthday public holiday. The Australian dollar strengthened. It was 0.3 per cent higher at 65.25 US cents at 5.13am AEST. Officials from the United States and China are meeting in London to talk about a range of different disputes that are separating them. The hope is that they can eventually reach a deal that will lower each's punishing level of tariffs against the other, which are currently on pause, so that the flow of everything from tiny tech gadgets to enormous machinery can continue. Hopes that President Donald Trump will lower his tariffs after reaching such trade deals with countries around the world have been among the main reasons the S&P 500 has rallied so furiously since dropping roughly 20 per cent from its record two months ago. It's back within 2 per cent of its all-time high, which was set in February, and it's higher than it was before Trump shocked financial markets in April with his wide-ranging tariff announcement on what he called 'Liberation Day.' This may be the shortest sell-off following a shock of heightened volatility on record, according to Parag Thatte, Binky Chadha and other strategists at Deutsche Bank. Typically, stocks take around two months to bottom following a spike in volatility and then another four to five months to recover their losses. This time around, stocks have basically made a round trip in less than two months. But nothing is assured, of course, and that helped keep trading relatively quiet on Wall Street Monday. Loading Some of the market's biggest moves came from the announcement of big buyout deals. Qualcomm rallied 4.4 per cent after saying it agreed to buy Alphawave Semi in a deal valued at $2.4 billion. IonQ, meanwhile, rose 1.6 per cent after the quantum computing and networking company said it agreed to purchase Oxford Ionics for nearly $1.08 billion.
