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U.S., European shares strengthen after Trump auto-tariff delay

Published 2019-05-15, 11:14 a/m
Updated 2019-05-15, 11:20 a/m
© Reuters.  U.S., European shares strengthen after Trump auto-tariff delay

© Reuters. U.S., European shares strengthen after Trump auto-tariff delay

* Wall Street, European shares turn higher after initial falls

* Trump expected to delay auto tariffs decision by up to 6 months

* Positive trade sentiment counters weak U.S., China economic data

* U.S. 2-year Treasury yield hits 15-month low after weak retail data

By Lewis Krauskopf

NEW YORK, May 15 (Reuters) - U.S. and European stock indexes erased losses and turned positive on Wednesday after news that U.S. President Donald Trump planned to delay tariffs on auto imports, outweighing earlier pressure on equities and government bond yields caused by weak U.S. and Chinese economic data.

Trump is expected to delay a decision on tariffs on imported cars and parts by up to six months, three administration officials told Reuters. Fears about an escalating global trade war, particularly following a spike in U.S.-China tensions, have rattled markets over the past week.

“Europe is on the brink of recession, and auto tariffs would almost certainly push it into recession," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. "President Trump announcing that he'd delay auto tariffs by as many as six months is positive, and stocks are reacting appropriately to that.”

Major U.S. and European stock indexes moved higher after falling earlier.

On Wall Street, the Dow Jones Industrial Average .DJI rose 41.48 points, or 0.16%, to 25,573.53, the S&P 500 .SPX gained 9.17 points, or 0.32%, to 2,843.58 and the Nasdaq Composite .IXIC added 55.34 points, or 0.72%, to 7,789.83.

The pan-European STOXX 600 index .STOXX rose 0.27%. Europe's auto's and suppliers index .SXAP jumped 1.5%.

Italian stocks .FTMIB were still down 0.3% after the country's deputy prime minister said Rome was ready to break EU fiscal rules. gauge of stocks across the globe .MIWD00000PUS gained 0.33%.

The positive trade developments lifted risk sentiment that had been dampened earlier in the session by weak economic data.

China reported surprisingly weaker growth in retail sales and industrial output for April. In the U.S., retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, while other data showed a drop in industrial production last month. market gave, up until now, the (Trump) administration the benefit of the doubt in prosecuting the trade war because the economy was strong, and now all of a sudden the data was weaker than expected and I think it is causing a little bit of concern here,” David Joy, chief market strategist at Ameriprise Financial (NYSE:AMP) in Boston, said before news of the auto-tariff delay.

U.S. Treasury yields fell, with the two-year yield at its lowest in 15 months as traders raised bets on a Federal Reserve interest rate cut after U.S. retail sales missed expectations. 10-year notes US10YT=RR last rose 10/32 in price to yield 2.3856%, from 2.419% late on Tuesday.

The dollar index .DXY , which measures the greenback against a basket of currencies, was flat, with the euro EUR= up 0.03% to $1.1206. crude CLcv1 rose 0.03% to $61.80 per barrel and Brent LCOcv1 was last at $71.67, up 0.6% on the day. Graphic: World FX rates in 2019

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