Nasdaq Composite Tops 6,000, Tariff Sinks Loonie: Markets Wrap

  • Caterpillar, McDonald’s corporate results boost Dow average
  • Canada dollar retreats after Trump tariff on lumber imports

Trump Rally Shows Signs of Life

The Nasdaq Composite Index surged past 6,000 for the first time as corporate results and the promise of Trump administration tax reform boosted risk appetite. A fresh American tariff on Canadian lumber sent the loonie and Mexican peso lower.

The Dow Jones Industrial Average jumped more then 200 points as Caterpillar Inc. surged 8 percent and McDonald’s Corp. rose 5 percent after reporting results. The S&P 500 Index closed near a record, with materials producers rallying with industrial metals. Stocks in Europe rose to a 20-month high. The yen fell with Treasuries and gold. The Canadian dollar tumbled after Donald Trump slapped a 24 percent tariff on imported softwood lumber.

Investor focus shifted to the U.S. economy where corporate earnings and data on housing starts underpinned speculation that growth is poised to accelerate a day before Trump is expected to unveil a tax plan that would cut the upper corporate rate to 15 percent. Trump’s decision to impose a fresh tariff rekindled protectionist concern, while shares in Europe rose as political risk abated, though tensions around North Korea continued to simmer.

“Attention will fast move over to Washington with the outline of the Trump tax plan likely tomorrow, the need to avoid the shutdown on Friday and the end of the first 100 days of Trump on Saturday” with the White House determined that higher growth can offset tax cuts, Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a note.

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Other events that may move markets this week:

  • Alphabet Inc., Microsoft Corp., Amazon.com Inc., Twitter Inc., Intel Corp., Credit Suisse Group AG, Barclays Plc, Bayer AG, Daimler AG and Total SA are among major companies releasing results this week.
  • The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday. Though inflation remains well below the central bank’s 2 percent target, it’s ticking up.
  • The European Central Bank sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the ECB is starting to discuss an exit from its extraordinary stimulus.
  • U.S. GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0 percent annualized rate in the first quarter, the weakest pace in a year. 

Here are the main market moves:

Stocks

  • The Dow rose 1.1 percent, or 232.16 points, to 20,996.05 at 4 p.m. in New York. It’s about 0.5 percent below its all-time high reached March 1.
  • The S&P 500 Index climbed 0.6 percent, 0.3 percent from its closing record. 
  • The Nasdaq Composite added 0.7 percent to 6,025.49, an all-time high.
  • An S&P index of homebuilders retreated 1.3 percent as the lumber tariff raised the cost to make new houses.
  • The Stoxx Europe 600 Index gained 0.2 percent. The gauge jumped 2.1 percent to the highest since August 2015 on Monday.  

Currencies

  • The Bloomberg Dollar Spot Index added 0.1 percent, after slipping 0.5 percent Monday.
  • The Canadian dollar dropped 0.5 percent to 1.35648 per dollar as Trump intensified a trade dispute with Canada, slapping tariffs of up to 24 percent on imported softwood lumber. Mexico’s peso lost 0.8 percent to 18.8893 per dollar.
  • The euro rose 0.4 percent to $1.0911, the highest level in five months.
  • The yen fell 0.9 percent to 110.767 per dollar. The currency dropped 0.6 percent in the previous session.

Bonds

  • U.S. bonds fell for a fifth day, with yields on 10-year Treasuries climbing four basis points to 2.31 percent. 
  • Franklin Templeton star bond-fund manager Michael Hasenstab called U.S. Treasuries one of the world’s biggest financial bubbles, saying investors seeking safety in U.S. government securities face the prospect of significant losses as yields rise.
  • The yield on French 10-year notes rose seven basis points to 0.89 percent, after tumbling 11 basis points in the previous session.
  • German benchmark yields added five basis points to 0.38 percent.

Commodities

  • Gold futures lost 1 percent to $1,264.90, slipping for a second day as investors turn attention to Trump’s agenda to boost U.S. growth. Most industrial metals advanced, led by copper.
  • Oil halted a six-day slide, rising 0.7 percent to settle at $49.56 a barrel in New York. U.S. government data Wednesday is forecast to show crude stockpiles fell for a third week.
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