Published: Mon, January 07, 2019
Money | By Bruce West

Trump says confident in US trade deal with China

Trump says confident in US trade deal with China

Still, manufacturing gauges are weakening as tariffs start to bite - and that's happening in China too.

Stocks are jumping early Friday as investors are encouraged by news of trade talks between the US and China and a strong report on the USA job market.

China's Commerce Ministry said trade talks will be held Monday and Tuesday in Beijing, and investors will again look for signs the world's largest economic powers are resolving their dispute. After a horrifying howl past year, the global stocks had still been carrying the wounds inflicted upon them, as a outcome of trade war.

At 8:30 a.m., the Labor Department said the USA economy added 312,000 jobs in December.

Official data this week showed manufacturing has slowed in both China and the United States, though the US Labor Department on January 4 reported a surge in new jobs in December along with higher wages.

The stock market's plunge also threatened to shake up businesses' and consumers' confidence and spending plans.

The U.S. government said employers added 312,000 jobs last month.

Stocks rallied on Friday after Federal Reserve Chairman Jerome Powell said the central bank will be patient in raising rates. "The Fed understands that what they attempted to communicate last month was inartful, that they didn't get the right message across, and Powell tried to reset".

The Dow Jones Industrial Average fell 660.02 points or 2.8 percent to 22,686.22 after Apple shares dropped 10 percent on Thursday.

Trader Gregory Rowe works on the floor of the New York Stock Exchange, Friday, Jan. 4, 2019.

The surprise warning of lower sales revenues in the fourth quarter of 2018 by top US smartphone maker Apple Inc. sends stock markets into deep fall on Thursday, leading to the question of "how important is the Chinese market to multinationals?" Other big exporters including technology and machinery companies also took big losses.

The U.S. and China have raised tariffs on billions of dollars of each other's goods in a fight over issues including Beijing's technology policy.

Talks in Switzerland would follow a meeting due to start in Beijing on Monday between USA and Chinese officials, the first formal gathering between the two sides since Trump and Chinese President Xi Jinping agreed to a 90-day tariff truce in December, following a widely-anticipated dinner at the Group of 20 meeting in Buenos Aires.

Technology and energy stocks are leading the broad gains.

China's leaders have offered to narrow its politically sensitive trade surplus with the United States by purchasing more soybeans, natural gas and other American exports. The tech-driven Nasdaq composite index now stands 18 percent down from its record closing high reached in August. Smaller companies have fallen further than larger ones in the last few months as investors got nervous about how the USA economy will perform in 2019 and 2020. Japan's Nikkei returned to trading after a public holiday to drop 2.3% in a delayed reaction to losses across global markets earlier in the week.

Stocks are rocketing higher Friday and wiping out much of the previous day's losses after a string of developments eased investors' concerns about the global economy and interest rates.

"We don't expect that this will be the end to the volatility", she said.

Bond prices also changed course and moved sharply lower. Analysts see S&P 500 companies posting profit gains of 15.8 per cent, significantly smaller than the third quarter's 28.4 per cent advance. The 10-year Treasury yield tumbled to an 11-month low of 2.56% on Thursday, a sharp decline from 3.23% in November.

In Asia, Hong Kong's Hang Seng jumped 2.2 per cent.

"These are tough times for Apple in China", said Neil Shah, research director at Counterpoint, adding the iPhone could see its market share slip to 7 percent this year in the face of stronger local rivals and worry about the sales ban. Brent crude, used to price global oils, was up 3.1 per cent to $57.66 per barrel in London.

The dollar strengthened to 108.51 yen from 107.77 yen. The British pound rose to $1.2740 from $1.2630. Microsoft rose 4.4 per cent to $101.70 and Deere gained 3.7 per cent to $149.31.

Gold fell 0.7% to $1,285.80 an ounce.

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