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The Advertiser
2 days ago
- Business
- The Advertiser
Stocks stall as investors watch US-China trade talks
Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce. Global stocks and the dollar have held steady as trade talks between the United States and China continued into a second day, giving investors some reason to believe tensions between the world's two largest economies may be easing. US Commerce Secretary Howard Lutnick said discussions between the two sides were going well, while President Donald Trump on Monday put a positive spin on the talks after Monday's session. Lutnick, together with Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer met their Chinese counterparts in London. Any progress in the negotiations is likely to provide relief to markets given that Trump's often-shifting tariff announcements and swings in Sino-US ties have undermined the two economies, disrupted supply chains and threaten to hobble global growth. World stocks, as reflected by the MSCI All-Country World index, traded near record highs on Tuesday while the dollar steadied against a range of currencies. "While market participants are clearly taking a glass half-full view of the outlook, both on trade policy and more broadly, we don't think that should be interpreted as a view that tariffs will be fully unwound," said Jonas Goltermann, deputy chief markets economist at Capital Economics. Goltermann anticipates US duties on Chinese goods to settle at around 40 per cent, while most analysts have said that the universal 10 per cent levy on imports into the United States is here to stay. In Europe the STOXX 600 edged lower, led by UBS whose shares dropped seven per cent as investors worried about the impact of new government proposals to force the Swiss bank to hold $US26 billion in extra capital. US stock futures were trading around 0.1 per cent higher. Meanwhile in Tokyo, Finance Minister Katsunobu Kato said policymakers were looking at measures to promote domestic ownership of Japanese government bonds, a day after Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates. The yield on the 10-year JGB was flat at 1.47 per cent, while 30-year yields were up one basis point at 2.92 per cent, having retreated from late May's record high of 3.18 per cent. The yen strengthened throughout the day, leaving the dollar roughly unchanged on the day around 144.5 yen, while the euro also turned positive, up 0.1 per cent at $US1.1428. The pound dropped 0.3 per cent to $US1.35 after weak UK employment data. Trump's erratic trade policies and worries over Washington's growing debt pile have dented investor confidence in US assets, in turn undermining the dollar, which has already fallen more than eight per cent this year. "It's not that the Americans are blowing up their fiscal situation because the deficit is going to remain more or less stable. But the quality of the deficit has degenerated," said Samy Chaar, an economist at Lombard Odier. "If you invest, and spend on productive investments, you'll get macro payoffs, because you're going to develop an industry, you're going to strengthen your economy, you're going to create jobs, you have a payoff. "If you spend by basically reducing revenues because you cut taxes on people who don't need the money, they won't be consuming more, or investing more, so the macro payoff is more limited." US Treasuries were yielding around 4.45 per cent, down 3.4 basis points on the day. Data on US consumer inflation for May due out on Wednesday could show the impact on tariffs on goods prices. The producer price index (PPI) report will be released a day later. "May's US CPI and PPI data will be scrutinised for signs of lingering inflationary pressures," said Convera's FX and macro strategist Kevin Ford. "If core CPI remains elevated, expectations for rate cuts could be pushed beyond the June 18 FOMC meeting." Traders expect the Fed to leave rates unchanged at its policy meeting next week. Just 44 basis points worth of easing have been priced in by December. In commodity markets, oil prices rose on the back of optimism that Tuesday's US-China talks could ease trade tensions and improve demand for energy, pushing Brent crude up 0.5 per cent to $US67.40 a barrel. Spot gold rose 0.4 per cent to $US3,341 an ounce.
Business Recorder
2 days ago
- Business
- Business Recorder
Most Gulf markets gain as investors eye US-China talks
Most stock markets in the Gulf ended higher on Tuesday, tracking gains in global equities as investors looked for progress in U.S.-China trade talks that could ease tensions between the world's two largest economies. U.S. Commerce Secretary Howard Lutnick said on Tuesday trade talks with China were going well as the two sides met for a second day in London, seeking a breakthrough on export controls that have threatened a fresh rupture between the superpowers. World stocks, as reflected by the MSCI All-Country World index, traded near record highs, while the dollar steadied against a range of currencies. Dubai's main share index rose 0.1%, helped by a 1.8% rise in top lender Emirates NBD. The bourse's gains were limited after the benchmark index hit its highest since 2008 on Monday. However, underlying momentum remains intact, suggesting the potential for further advances in the coming sessions, said Osama Al Saifi, Managing Director for MENA at Traze. 'Although many sectors were in negative territory today, solid market fundamentals point towards continuous gains.' Most Gulf markets rise, Dubai's main index hits over 17-year high Abu Dhabi, the main index finished 0.5% higher. Oil prices - a catalyst for the Gulf's financial markets - climbed as investors awaited the outcome of U.S.-China trade talks and as Saudi Arabia's crude supply to China is set to dip slightly. The Qatari index advanced 1.3%, led by a 1.4% gain in the Gulf's biggest lender Qatar National Bank. Outside the Gulf, Egypt's blue-chip index closed 0.7% higher, with Talaat Moustafa Group Holding rising 2.5%. The Saudi and Bahrain bourses remained closed due to a public holiday. ------------------------------------- Abu Dhabi up 0.5% to 9,796 Dubai added 0.1% to 5,599 QATAR rose 1.3% to 10,697 EGYPT gained 0.7% to 32,904 OMAN was up 0.1% to 4,582 KUWAIT added 0.8% to 8,925 -------------------------------------
Globe and Mail
04-03-2025
- Business
- Globe and Mail
Could U.S. investment leadership fade?
What has defined world capital markets since the 2008 global financial crisis (GFC)? The remarkable dominance of U.S. equities. But history reminds us that market leadership is seldom permanent. Just look to Japan during the 1980s or the BRIC nations in the 2000s. Dominance isn't destiny. Where to next for the U.S.? From 2009 onward, the U.S. benefited from substantial tailwinds: aggressive monetary easing led by the Fed, a competitive currency, and a relatively inexpensive stock market. It is a distant memory now, but for many years after the GFC the U.S was seen as one of the worst places in the world to invest. The nation was at the epicenter of the GFC with a reputation for fiscal mismanagement. Yet the S&P 500 produced a total return of nearly 600% over the last decade, fueled largely by stellar earnings from top tech companies – responsible for nearly half of those gains. Today, global markets are concentrated in a single theme – U.S. Big Tech. Even though the U.S. share of global GDP declined from 32% in 2001 to 27% recently, its share values nevertheless now command a staggering 66% of the MSCI All-Country World index (from 30% in the early 1990s). Most asset allocators are now firmly committed to a structural U.S. equity overweight, assuming this positioning will continue to drive superior returns. Catalysts that could lead to U.S. market re-rating But what could change all this? The challenge with investment leadership changes is that old narratives take time to be replaced by new ones. People have a hard time giving up their investment paradigms when something has worked well for so long. But a few key catalysts could lead to a fundamental re-rating of the U.S. stock market. The first one is the sky-high bar for future earnings growth. Corporate America must deliver exceptional results to meet market expectations, leaving little room for error. Disappointments, even modest ones, could shake confidence and weigh heavily on valuations. Second, the policy agenda of Donald Trump's second term will likely represent a sharp divergence from his first. U.S. economic outperformance has been bolstered by two key drivers: labour force expansion through robust immigration and, most importantly, fiscal expansion. These factors created a powerful tailwind for corporate profits, underpinned by a strong linkage between deficits and earnings. Higher deficits translated directly into higher profits, fueling market gains. If Trump follows through on his current mandates, however, these pillars of growth could be dismantled. Policies aimed at reducing deficits and tightening immigration would suppress two critical engines of economic expansion. Elon Musk, now co-head of the Department of Government Efficiency (DOGE), promises to slash $2 trillion dollars in federal spending. Meanwhile, Treasury Secretary Scott Bessent pledges to cut the budget deficit to 3% by 2028. Both of these are solid long-term objectives, but they offer little immediate support for risk assets. The result could be a slowdown in U.S. growth, revealing the outsized role fiscal stimulus has played in driving U.S. market performance over the past decade. Global markets regaining momentum By contrast, many emerging markets and developed economies outside the U.S. are only in early stages of policy easing. Here, one cannot ignore China, where after more than three agonizing years of austerity, the policy paralysis has been broken and turned stimulative. Not many investors are buying it. But Xi Jinping has said the economy needs to be stabilized, whatever it takes. Reflect on Mario Draghi's similar declaration in 2012 – now seen as pivotal in ending the Euro crisis. Was it obvious at the time? Most weren't convinced, and EU leaders continued to stumble through summits. Only in hindsight did Draghi's words mark a turning point. China is following a similar path. A year from now, we will see today's seemingly small, disappointing measures as the start of a significant shift. Looking ahead, the recovery that started in the U.S. will start to spread globally. Economic activity outside America is already firming, the cost of capital is falling, and many global markets, left behind over the last few years, are quietly gaining momentum. Even the perennially lagging Eurozone has fundamentals supporting the economy that are more solid than headlines suggest. Labour markets remain relatively robust. Consumers have shrugged off higher rates and wages are still outpacing inflation. And, most importantly, corporate profits are heading higher. This strength will continue to catch many by surprise. And it is the exact reason why global stock market rallies should continue to broaden and grind higher in the coming years. Investment implications Markets stand at a pivotal moment. While chasing U.S. technology giants may seem intuitive, history reminds us that the winners of one decade rarely lead the next. Elevated valuations and high expectations naturally dampen future returns. Meanwhile, the advancing global business cycle presents a compelling opportunity to move away from defensive U.S. growth stocks – historically strong in low-growth environments – toward higher-return prospects in undervalued global markets. W ith the bull market broadening and investment leadership primed to shift, the case for diversification and the opportunity for global macro investing has rarely been greater. Informed, active management will be essential to navigating and capitalizing on the opportunities ahead. Tyler Mordy, CFA, is CEO and CIO of Forstrong Global Asset Management Inc., engaged in top-down strategy, investment policy, and securities selection. This article first appeared in Forstrong's 2025 Super Trends Report: Fifty Shades Of Greatness. Used with permission. You can reach Tyler by phone at Forstrong Global, toll-free 1-888-419-6715, or by email at tmordy@ Follow Tyler on X at @TylerMordy and @ForstrongGlobal. Disclaimers Content © 2025 by Forstrong Global. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited. Used with permission. The foregoing is for general information purposes only and is the opinion of the writer. The author and clients of Forstrong Global Asset Management may have positions in securities mentioned. Performance statistics are calculated from documented actual investment strategies as set by Forstrong's Investment Committee and applied to its portfolios mandates, and are intended to provide an approximation of composite results for separately managed accounts. Actual performance of individual separate accounts may vary with average gross 'composite' performance statistics presented here due to client-specific portfolio differences with respect to size, inflow/outflow history, and inception dates, as well as intra-day market volatilities versus daily closing prices. Performance numbers are net of total ETF expense ratios and custody fees, but before withholding taxes, transaction costs and other investment management and advisor fees. Commissions and management fees may be associated with exchange-traded funds. Please read the prospectus before investing. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.
