By Joyce Yu
U.S. stocks rebound on Monday as the Sino-US trade dispute show signs of easing. With the Q1 earnings season just around the corner, investors expect tax cuts to help corporate America show its biggest quarterly profit growth in seven years.
“One of the reasons why we’re seeing quite a strong rally at the opening is that the administration over the weekend including Mr Trump basically tried to deflate the fears of a trade war,” Peter Cardillo, chief market economist at First Standard Financial in New York, told Reuters. “It appears the market has entered into a trading range and is basically fluctuating ahead of the earnings season.”
Global markets came under pressure last week amid tit for tat trade actions between the US and China. U.S. stocks dropped about 2% on Friday, with the Dow falling more than 570 points. Investors became jittery as they feared protectionist measures would hit global economic growth. However, over the past weekend, President Donald Trump appeared to soften some of his trade rhetoric. Trump’s Chief Economic Adviser Larry Kudlow also said in an interview on Sunday the ongoing spat “might turn out to be very benign”.
Goldman Sacks wrote in a note that investors shouldn’t worry over the latest round of trade policy retaliation between the U.S. and China. Trade tensions represent a minimal risk to S&P 500 earnings in aggregate.
The week also marks the start of earning season with big U.S. banks such as JPMorgan Chase, Citigroup and Wells Fargo reporting first-quarter results on Friday. Other hot stocks include Facebook who just suspended data analytics firm CubeYou from its platform after receiving notifications that the firm was collecting information about users through quizzes. This is in addition to the firm’s data leak scandal which led its CEO Mark Zuckerberg to make congressional appearances Tuesday and Wednesday. He is meeting with some U.S. lawmakers today.
Two companies on China’s tariff target list – General Motors and Boeing, on the other hand, are having some good news. Morgan Stanley upgraded General Motors’ stock to “overweight” from “equal weight” with pickup in truck sales and a potential ramp up in infrastructure spending is better understood. Boeing received an order for 47 787 Dreamliners from American Airlines worth more than $12 billion at list prices.
Over in Europe, Germany’s biggest lender Deutsche Bank named Christian Sewing as its new chief executive officer, replacing John Cryan who failed to lead the bank to turnaround in the past three over years. Sewing, who had been the bank’s deputy CEO, said Deutsche Bank had to make tough decisions and stick with cost targets to avoid further losses.
