Stock markets turn around after tech sell-off
BANGKOK (AP) — Shares in Europe are bouncing back Tuesday and Wall Street appears headed for gains as Mexico tries to ease trade tensions with the U.S., while President Donald Trump meets with Britain’s prime minister and leading CEOs amid questions over Brexit.
A report showing that the unemployment rate has fallen fell to its lowest in more than a decade in the 19 countries that use the euro also appears to have helped European markets. Germany’s DAX led the way, climbing nearly 0.9% to 11,893. Britain’s FTSE 100 rose 0.1% to 7,194 and the CAC 40 in France also picked up 0.1% to 5,247.
Wall Street looked set to rise on the open, with the future contract for the Dow Jones Industrial Average up 0.4% at 24,986. The future for the S&P 500 index added 0.4% to 2,761.
Mexican officials have been taking to Twitter to communicate that they are working to de-escalate tensions over immigration and avoid punitive tariffs on all Mexican exports to the U.S. that Trump threatened last week. Announcements of meetings in Washington this week and carefully crafted messages of optimism - combined with Trump’s trip to Europe - may have taken some of the spotlight off the Mexico-U.S. trade tensions and concerns about tech stocks.
Monday’s news that the Trump administration is considering anti-trust moves against tech giants triggered a sell-off, pushing the Nasdaq composite index into a correction, Wall Street speak for a drop of 10% or more from a peak.
The Nasdaq hit its most recent all-time high early last month, before the trade dispute between the U.S. and China escalated, setting off a month-long slide. The Nasdaq tumbled 1.6% to 7,333.02. It’s now down 10.2% from its all-time high set May 3.
Earlier, in Asia, Hong Kong’s Hang Seng dropped 0.5% to 26,758.55 and the Shanghai Composite index slipped 1.0% to 2,862.28. Japan’s Nikkei 225 index ended flat at 20,408.54. The Kospi in South Korea declined less than 0.1% to 2,066.97.
Australia’s S&P ASX 200 advanced 0.2% to 6,332.40 after the central bank announced it was cutting its benchmark interest rate to a record low 1.25% from 1.5%. It was the first rate cut in nearly three years.
“Assuming banks cut their rates by 0.25% it will take deposit rates to their lowest since the mid-1950s and headline mortgage rates to their lowest since the early 1950s, although some mortgage rates are already at record lows,” Shane Oliver of AMP Capital said in a commentary.
He suggested more cuts may be in the offing.
“Rate cuts are a bit like cockroaches. If you see one there is normally another nearby,” he added.
CURRENCIES: The dollar fell to 107.97 Japanese yen from 108.07 yen on Monday. The euro strengthened to $1.1260 from $1.1242.
ENERGY: Benchmark U.S. crude slid 66 cents to $52.59 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, it slid 0.5% to settle at $53.25 a barrel. Brent crude oil, the international standard, declined 85 cents to $60.43 per barrel. It closed 1.1% lower on Monday at $61.28 per barrel.