Global Stocks Regain Ground After Losses

By Ben St. Clair
   -- Stocks rebound from Wednesday's fall

   -- China guides currency lower

   -- Commodity futures rise

Stocks in Asia and Europe rose Thursday, a day after major global indexes fell amid concerns over escalating trade tensions and falling oil prices.

Futures pointed to a 0.6% opening gain for the S&P 500 and a 0.8% gain for the Dow Jones Industrial Average. The Stoxx Europe 600 was up 0.6% in afternoon trading, led by gains in travel and leisure and media companies.

Shares of oil-and-gas companies were lower, even as Brent crude oil was up 1.1% at $74.23 a barrel Thursday. The global benchmark fell by almost 7% a day earlier on news that Libya would resume exports, its sharpest daily decline since February 2016.

Stocks have continued to seesaw as investors react to developments on trade and await second-quarter earnings, set to come into full swing Friday with U.S. banks reporting results.

The Trump administration said Tuesday it would assess additional tariffs on $200 billion on a variety of Chinese goods, including bicycles, sound systems, refrigerators, pocketbooks, vacuum cleaners, cosmetics, tools and seafood.

The news led to declines across global stocks and commodities, compounded by the falling crude prices.

In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.

"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel, CIO of absolute return strategies for SEI Investments.

But the market can be driven higher by strong economic data and corporate earnings, said Mr. Smigiel, even if factoring in different trade outcomes remains challenging.

"We think that those fundamentals will be enough to overcome this steady stream of trade war rhetoric and action," he said.

U.S. economic data out Wednesday showed higher inflation. The producer-price index, which measures prices that businesses receive for their goods and services, rose 3.4% from the year before, the largest annual increase since November 2011, the Labor Department said Wednesday

The increase, which was higher than expected, raises the probability of two additional rate rises from the Federal Reserve this year. June data on consumer prices is out later Thursday.

Yields on 10-year Treasurys were up to 2.865% from 2.844% on Wednesday. Yields rise as prices fall.

In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.

Hong Kong-listed shares in Chinese telecommunications equipment maker ZTE soared 25% Thursday after the company cleared the last major hurdle to lift U.S. sanctions. The U.S. Commerce Department in April had banned U.S. companies from selling to ZTE as punishment for the company's failure to honor an earlier U.S. agreement over sales to North Korea and Iran.

Thursday's gains in Asian equities came as China guided the yuan to its largest one-day drop against the U.S. dollar in a year and a half. The central bank, which determines a daily dollar-yuan exchange rate and allows the currency to trade within 2% of that level, set the dollar's reference rate at 6.6726 yuan.

A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.

The yuan has declined 2.5% against the dollar this year as the greenback has strengthened. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, is up over 5% in the past three months, as strong economic data and rising interest rates have helped support it.

In commodities, copper futures rose 1.1% and aluminum futures edged down 0.4% after earlier gains.

Elsewhere in markets, the Turkish lira climbed 1.4%, after steep falls on Wednesday and Monday. Investors have reacted negatively after President Recep Tayyip Erdogan appointed his son-in-law as finance minister and put in place measures that could curb the independence of Turkey's central bank.

By Ben St. Clair
   -- Stocks rebound from Wednesday's fall

   -- China guides currency lower

   -- Commodity futures rise

U.S. stocks rose Thursday, putting major indexes on track for a rebound from a trade-driven market midweek selloff.

The Dow Jones Industrial Average rose 124 points, or 0.5%, to 24826 in morning trading. The S&P 500 gained 0.3%, while the Nasdaq Composite added 0.4%.

A major deal announcement contributed to the S&P 500's biggest gainer, while trade tensions appeared to settle a day after reports that the Trump administration is considering additional tariffs on $200 billion of products.

Software company CA led the S&P 500 higher after Broadcom agreed to buy the firm for $18.9 billion late Wednesday. Shares of CA rose 18% to lead the broader tech sector higher.

Meanwhile, industrial companies, including aerospace firms, were also contributing to Thursday's better performance to recover from some of the losses suffered Wednesday, as investors digested the latest trade salvo out of Washington, D.C.

Shares of Lockheed Martin rose 1.4%, while Boeing, a Dow component, added 1%.

Despite Thursday's upbeat session, investors continue to worry that the relatively small pronouncements the U.S. and China have taken against one another on trade will eventually lead to more dramatic measures, such as the multibillion tariff package the Trump administration is now considering.

The volatility could also distract from the coming earnings season, even though S&P 500 companies are expected to grow second-quarter profits by 20% from a year earlier, according to FactSet.

"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel at SEI Investments.

U.S. economic data out Thursday showed higher inflation. The consumer-price index, which gauges the prices Americans pay on most goods, rose 2.9% from the year before, the highest level since February 2012, the Labor Department said.

Elsewhere, the Stoxx Europe 600 was up 0.5% in afternoon trading, led by gains in travel and leisure and media companies.

In Asia, Hong Kong's Hang Seng was up 0.6% while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.

Thursday's gains in Asian equities came as China guided the yuan to its largest one-day drop against the U.S. dollar in a year and a half. The central bank, which determines a daily dollar-yuan exchange rate and allows the currency to trade within 2% of that level, set the dollar's reference rate at 6.6726 yuan.

A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.

By Michael Wursthorn and Ben St. Clair
   -- Stocks rebound from Wednesday's fall

   -- China guides currency lower

U.S. stocks rose Thursday, putting major indexes on track for a rebound from a midweek selloff.

Shares of technology companies led the stock market higher. A major software-deal announcement appeared to fuel the buying spree, sending the S&P 500 technology sector up more than 1%.

Meanwhile, investors momentarily put aside their brewing trade concerns a day after the Trump administration threatened tariffs on an additional $200 billion of products from China, including bicycles, refrigerators and pocketbooks. Beijing is currently reviewing plans to hit back beyond levies on imports, although no new policies have been announced.

"We don't know how it's going to pan out," said Tom Martin, a senior portfolio manager at Globalt Investments. "But the market is understanding more and more that President [Donald] Trump isn't bluffing."

The Dow Jones Industrial Average rose 213 points, or 0.9%, to 24917 in recent trading. The S&P 500 gained 0.8%, while the tech-heavy Nasdaq Composite added 1.2%.

CA led tech firms and the broader S&P 500 higher after Broadcom agreed late Wednesday to buy the software company for $18.9 billion. Shares of CA rose 18% and appeared to boost the stocks of other software companies that trade in the S&P 500, including Red Hat and Autodesk, up more than 3% each, while Salesforce.com added 2.4%.

Meanwhile, industrial companies, including aerospace firms, also contributed to Thursday's better performance, recovering some of the losses those firms suffered during Wednesday's trade-fueled selloff. Shares of Lockheed Martin rose 2%, while Boeing, a Dow component, added 1.5%.

Airline stocks got a boost after Delta Air Lines reported profits that beat analyst expectations, even though the company said higher fuel costs will weigh on profits for the rest of the year. Shares of Delta added 1.5%.

While the trade spat between the U.S. and China continues to play out, investors will be focusing on the glut of second-quarter earnings results that are expected to be released in the coming weeks to glean clues on how the ongoing trade rhetoric is affecting companies and how businesses are faring with higher commodity prices.

Overall, profit results are expected to build on the strong first quarter, analysts said. Companies continue to enjoy the one-time benefits of the tax overhaul passed last year, while the global growth upswing last year has left businesses on better footing. S&P 500 companies are expected to increase second-quarter earnings 20% from a year earlier.

That should help stabilize stock prices and push major indexes higher, with analysts predicting a 13% price increase in the S&P 500 over the next 12 months, FactSet said.

Still, the potential for a full-blown trade war between the U.S. and China -- the two largest economies in the world -- could derail those gains and cause indexes to churn up and down, similar to how trade threats helped to sap some of the market's gains in June.

"We're at a situation where the markets have to react to the uncertainty, " said Jim Smigiel, chief investment officer of absolute-return strategies for SEI Investments.

The stock market also got a fresh sign that inflation is moving higher. The consumer-price index, which gauges the prices Americans pay on most goods, rose 2.9% from the year before, the highest level since February 2012, the Labor Department said.

Investors have been warming to the idea of rising inflation all year, especially after the January jobs report helped send major indexes into correction territory in early February. The latest data put inflation closer to where the Federal Reserve wants it, analysts said.

"Inflation doesn't look like it's getting out of control and to a place where people need to react," Globalt's Mr. Martin said.

Elsewhere, the Stoxx Europe 600 rose 0.8% and is up seven of the past eight trading days. In Asia, Hong Kong's Hang Seng was up 0.6%, while the Shanghai Composite Index rose 2.2%. Japan's Nikkei rose 1.2%.

Stocks in Asia rose after China's central bank guided the yuan to its largest one-day drop against the U.S. dollar in a year and a half. A weaker yuan makes Chinese exports more competitive and its goods more valuable abroad.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com


  (END) Dow Jones Newswires
  07-12-18 0800ET
  Copyright (c) 2018 Dow Jones & Company, Inc.

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