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US Stock Market Overview – Stock Decline on Rising Trade Concerns

David Becker

Equity markets were lower but finished well off session lows. Prices on the Dow Jones Industrial Average moved into the black mid-day but slipped into the close. Commentary surrounding the US-Chinese trade war continue to point to a long protracted fight. Later in the trading session the Trump administration said they would postpone any final decision on whether to impose tariffs on autos, which could affect the EU, Japan, and Mexico. Tariffs will be delayed at least 6-months while the administration focuses on China. Also, on the trade front, both the US and Canada announced they would lift all tariffs on Steal. Breaking news at the end of the trading session shows that China and US trading negotiations have stalled. Most sectors were lower, and the market was led down by energy shares, utilities bucked the trend.

White House Postpones Car Tariff Decision

The Trump administration said Friday it would postpone for six months a final decision on whether to impose broad tariffs on automobile and auto-part imports. Mr. Trump has repeatedly warned he could slap tariffs on cars produced by major trading partners including the European Union and Japan, citing national-security concerns. The administration has sought to use the pressure from that threat to negotiate bilateral trade agreements. At appears that it might take the Trump-XI meeting in late June to get the talks back on track. The Yuan is also signaling that there is trouble. The exchange rate of the Chinese currency is testing the $7 level. The currency has remained stable over the past year as both countries attempted to work out and agreement. A break over $7 per yuan could see the exchange rate move to 7.8.

Sentiment is Stable but Rose Earlier in the Month

The University of Michigan reported that consumer sentiment surged its highest level in 15 years in early May. The first look at May consumer sentiment index rose to 102.4, up from 97.2 in April beating expectations of 97.5. The period measured fell during a period prior to the latest US-China trade spat, earlier in May.

Content remains king and if you have a company that produces content the value can soar. Shares of Lions Gate surged as much as 15% Friday after a report said CBS had made an informal offer to buy Starz. Lions Gate notably bought Starz for $4.4 billion in late 2016. This move comes as the entertainment industry as a whole has been consolidating. Disney recently closed its deal to acquire assets from Fox.

Deere Cuts Production as Demand for Farming Equipment Sinks

Deere cut production in several factories as farmers cut back on new equipment in the face of the US-Chinese trade tariffs. With soybeans piling up in the US and a Bill needed to save US farmers, the company is hunkering down ready for a protracted downturn.

This article was originally posted on FX Empire