U.S. stocks staged a broad afternoon rally to gain ground, but the S&P 500 still logged its largest weekly drop of 2019 following a volatile stretch dominated by U.S.-China trade policy updates. Stocks slid to start the day, sending the Dow Jones Industrial Average down nearly 360 points, before rebounding in the afternoon. The rally came after Treasury Secretary Steven Mnuchin told CNBC the most recent trade talks were “constructive” and President Trump tweeted that tariffs “may or may not be removed” depending on future negotiations. Friday was the latest example of trade signals affecting global stocks and commodities, with investors fearing a pullback in economic activity. After optimism about a trade deal helped push the S&P 500 to a fresh record late last month, worries about further tariffs slowing global growth have hurt major indexes as they did late last year. Mr. Trump in a series of tweets Friday continued to back tariffs as good for the U.S. economy, after the U.S. increased tariffs on $200 billion of Chinese goods to 25%. He also said the U.S. will continue to negotiate but there is “absolutely no need to rush,” increasing the likelihood of further volatility in the coming days, analysts said.
In other commodity news, gold futures settled higher for a second straight session, helping prices to post a modest weekly rise, as the Trump administration increased tariffs on $200 billion in Chinese imports, a move that appeared to maintain selling pressure on riskier global markets and benefit haven precious metals. Gold for June delivery rose $2.20, or 0.2%, to settle at $1,287.40 an ounce. The precious metal marked its fifth gain in six sessions, according to FactSet data. For the week, prices based on the most active contract climbed 0.5%. Gold gained modestly through the week, benefiting “from the reemergence of trade volatility, a factor the market had previously believed to be settled,” said Ryan Giannotto, director of research at GraniteShares, which offers the GraniteShares Gold Trust (BAR). “Notably, gold crossed back over into the green this week after previously having given up all of its yearly gains since its February 20 high of $1,346.80.” The gain for the week was still only the second weekly rise for gold futures in seven weeks, FactSet data show. For now, “investors are buying into the safe havens as Trump’s tariff increases cast a shadow over the future global economic outlook,” said Jasper Lawler, head of research for London Capital Group. The dollar, as measured by the ICE U.S. Dollar Index , fell 0.2%, helping to lift
demand for U.S.-priced gold by investors using other currencies. Among other metals, palladium was a standout, with the June contract up 5.3% to settle at $1,350.70 an ounce, though it lost 0.5% for the week. July platinum also rose by 1.7% to $865.60 an ounce Friday, but suffered a weekly loss of 1.1%. July silver added 0.1% to $14.79 an ounce, with the commodity posting a weekly loss of 1.3%. July copper rose 0.1% to $2.775 a pound, for a weekly decline of 1.6%. Frank Holmes, chief executive and chief investment officer of U.S. Global Investors, recently told MarketWatch that he considers copper a “no-brainer buy at $2.65 a pound.”In a note Friday, however, Oliver Allen, assistant economist at Capital Economics, said “a total breakdown in U.S.-China trade talks would undoubtedly be a further negative for the prices of most industrial metals.” However, Capital Economics had already “expected a subdued global economy, and weak growth in China in particular, to send most [industrial] metals prices lower this year,” regardless of the latest tariff increase, he said.
Iron Ore: 92.52s + 0.73 (Contract)
U.S. oil prices fell slightly and ended lower on a weekly basis for a third straight week as testy U.S.-China trade talks unsettled the market and fueled concerns of weakening global oil demand. West Texas Intermediate futures, the U.S. oil benchmark, ended 0.1% lower at $61.66 a barrel on the New York Mercantile Exchange. For the week, WTI fell 0.5%, and is down 3.7% over the past three weeks. Brent crude, the global oil benchmark, was up 0.3% at $70.62 a barrel on London’s Intercontinental Exchange. Oil prices rose sharply from January through most of April, but have turned lower the past three weeks, first due to an unexpected buildup of U.S. oil inventories, and now over concerns regarding the seeming lack of progress on trade talks between the U.S. and China. Talks broke off on Friday with no agreement announced, hours after the tariff level on $200 billion of imports from China was raised.
The dollar reversed earlier losses against the Japanese yen, after President Trump said that trade talks with China will continue and hinted that tariffs could be ended. Hopes of a positive outcome to the latest flareup between the two countries pushed some investors out of the yen, a popular haven during times of economic or political uncertainty. The dollar was up 0.2% against the yen at ¥109.93, after falling to ¥109.48 earlier in the session. Updates on U.S.-China trade talks have dented markets around the world this week, setting off sharp drops for global stocks and commodities as investors prepare for a potential pullback in economic activity. The dollar also retreated against many emerging market currencies on Friday, after rising sharply earlier this week. But it rose 0.1% against the Chinese yuan to trade near a four-month high in the offshore market. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.18% at 90.50.