Stocks on Wall Street on Friday rebounded as investors who were initially spooked by the prospect of a global trade war backed off those concerns on the notion that US President Donald Trump was just rattling sabers as a negotiating tactic.
Trump’s on Thursday pledge to impose hefty tariffs on steel and aluminum imports sparked concerns about tit-for-tat retaliation that could wound a healthy US economy that is poised to deliver record corporate earnings.
An ensuing rout in risk assets knocked the US dollar from multi-week highs and briefly pushed all three major US stock indices into negative territory for the year on fears that a global protectionist wave would be negative for the greenback.
However, investors decided a full-blown global trade war was not in the making and that Trump was only grabbing people’s attention about the US trade deficit, Federated Investors Inc chief equity strategist Phil Orlando said in New York.
“For a real-estate guy like that, you pound the podium, you rattle some sabers, you get everybody’s attention and then you negotiate back to some reasonable midpoint,” Orlando said.
MSCI’s gauge of stock performance in 47 countries pared losses of 1 percent to close little changed.
The S&P 500 and NASDAQ rebounded from losses of 1 percent or more to close higher. However, the Dow ended lower and remained in negative territory for the year so far.
The Dow Jones Industrial Average on Friday fell 70.92 points, or 0.29 percent, to 24,538.06, a drop of 3 percent from a close of 25,309.99 on Feb. 23.
The S&P 500 on Friday gained 13.58 points, or 0.51 percent, to 2,691.25, falling 2 percent from 2,747.30 a week earlier.
The NASDAQ Composite on Friday added 77.31 points, or 1.08 percent, to 7,257.87, a decrease of 1.1 percent from 7,337.39 on Feb. 23.
Earlier in Europe and Asia, where markets were closed when Trump’s tariff proposal was announced on Thursday, major equity indices fell more than 2 percent.
Tokyo’s Nikkei 225 on Friday tumbled 542.83 points, or 2.5 percent, to close at 21,181.64, a drop of 3.2 percent from 21,892.78 a week earlier.
Hong Kong’s Hang Seng on Friday shed 460.8 points, or 1.5 percent, to 30,583.45, falling 2.2 percent from 31,267.17 on Feb. 23.
The pan-European STOXX 600 on Friday lost 7.82 points, or 2.1 percent, to close at 367.04, shedding 3.7 percent from 381.16 a week earlier.
The sell-off in European stocks weighed particularly on Germany’s export-oriented DAX, which on Friday fell 277.23 points, or 2.3 percent, to a six-month low of 11,913.71, a decrease of 4.6 percent from 12,483.79 a week earlier.
Meanwhile, the dollar index fell 0.42 percent, with the euro up 0.5 percent to US$1.2328.
The Japanese yen firmed 0.5 percent versus the greenback at ￥105.72 per dollar.
The Mexican peso, which was lower during most of the session, gained 0.15 percent at 18.80.
The Canadian dollar fell 0.39 percent versus the greenback at C$1.29 per US dollar.
US Treasury yields rose as markets priced in the risk of a trade war. The 10-year yield bounced back from a three-week low as the Bank of Japan’s chief hinted at a possible exit from its ultra-easy policies if inflation hits its target in fiscal year 2019.
The benchmark 10-year note’s yield rose to 2.8679 percent.
In the commodities markets, benchmark US crude rose US$0.26 to settle at US$61.25 per barrel. Brent crude, the international standard, rose US$0.54 to US$64.37 per barrel.
Gold rose US$18.20 to settle at US$1,323.40 per ounce, while silver climbed US$0.19 to US$16.47 per ounce and copper added US$0.02 to US$3.12 per pound.
Additional reporting by staff writer
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