Stocks Waver as Trump Meets With Xi, Futures Rise: Markets Wrap
(Bloomberg) — Stocks pared gains as the US and China began their summit, with traders looking to the meeting for clues on the trajectory of trade ties between the world’s two largest economies.
MSCI’s Asia Pacific equities index was 0.1% higher, after earlier rising as much as 0.8% to an intraday record. Shares in mainland China slipped 1%, having touched their highest level since 2021 ahead of the talks between US President Donald Trump and China’s Xi Jinping in Beijing. The offshore yuan edged up for a 11th day, the longest winning streak since September 2017.
Artificial intelligence trade was in focus with a gauge of Asian technology shares climbing as much as 2.3% to a record. US equity-index futures advanced with contracts for the Nasdaq 100 Index climbing 0.5% after a stronger-than-expected sales outlook by Cisco Systems Inc. The company’s shares jumped 20% in extended trading.
Optimism for tech and stocks masked worries about inflation that have driven bets the Federal Reserve will raise interest rates next year. Treasuries trimmed Wednesday’s losses, with the US 10-year yield slipping one basis point to 4.46%.
Equities globally have pushed to record highs, supported by robust corporate earnings and expectations that AI-driven spending will sustain growth. Traders are also focused on geopolitical developments in Iran and the meeting between Xi and Trump for their potential impact, as concerns mount that the war in the Middle East may keep inflation elevated and weigh on the global economy.
“Attention now turns to ongoing geopolitical headlines with President Trump continuing his visit to China and markets remaining highly sensitive to any developments surrounding the Strait of Hormuz,” Nick Twidale, chief market analyst at AT Global Markets, wrote in a note to clients.
Xi said in his opening remarks that China and the US should be partners. Trump said the relationship between the two countries is going to be better than ever before.
What Bloomberg Strategists Say…
“There is the risk of investors pricing in too much of a warm glow from the Beijing discussions. Should there be any sign of disagreement on trade or geopolitical issues between the two leaders, that would deliver an unwelcome jolt to the buoyant sentiment across markets.”
— Mark Cranfield, MLIV. For full analysis, click here.
Brent crude traded around $106 a barrel after falling 2% in the previous session, while West Texas Intermediate was near $101. The dollar was little changed after strengthening over the past three days.
Elsewhere, US inflation reports this week have shown mounting price pressures, pushing traders to boost wagers on a Fed rate hike in the coming year. The yield on 10-year Treasuries rose to the highest since July on Wednesday.
US wholesale inflation accelerated in April to the fastest pace since 2022 on a war-driven increase in energy prices that’s feeding into higher freight transportation costs. The producer price index rose 6% from a year ago, according to Bureau of Labor Statistics data out Wednesday, eclipsing economist estimates and coming in after a hot consumer price readout.
“One takeaway is that companies are not passing through costs to consumers across the board just yet,” said Chris Low at FHN Financial. “But company input costs are sharply higher, which obviously increases pressure to pass through costs in future.”
Separately, the Senate narrowly confirmed Kevin Warsh as chair of the Fed, setting up the most controversial leadership transition at the US central bank in decades and a test of its political independence.
First-quarter profits at S&P 500 companies have surged 27% so far, more than double the roughly 12% analysts had expected — the fastest year-on-year earnings growth outside of recoveries from major shocks since 2004.
Morgan Stanley strategists are turning more positive on US equities in a bet that profits and a strong economy will keep the bull market running. The team led by Mike Wilson expects the S&P 500 to reach 8,300 in the next 12 months. The gauge is currently trading near 7,444.
“Resiliency in earnings data despite geopolitical risk, private credit concerns and AI disruption is supportive of our view,” Wilson said.
Corporate Highlights:
Cerebras Systems Inc. raised $5.55 billion in its US initial public offering, as the artificial intelligence chipmaker seizes on the surging demand for semiconductors. Elon Musk’s xAI has recruited multiple Wall Street firms with ties to the billionaire’s business empire to test its Grok chatbot, according to people familiar with the matter, part of a push to bolster revenue ahead of parent company SpaceX’s initial public offering. Ford Motor Co. jumped after Morgan Stanley issued a bullish call that the automaker’s energy storage business could soon make a deal with hyperscalers. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 12:09 p.m. Tokyo time Nikkei 225 futures (OSE) rose 0.2% Japan’s Topix fell 0.4% Australia’s S&P/ASX 200 fell 0.2% Hong Kong’s Hang Seng rose 0.4% The Shanghai Composite fell 1.1% Euro Stoxx 50 futures rose 0.7% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1710 The Japanese yen was little changed at 157.98 per dollar The offshore yuan was little changed at 6.7863 per dollar Cryptocurrencies
Bitcoin fell 0.7% to $79,153.38 Ether fell 0.8% to $2,244.03 Bonds
The yield on 10-year Treasuries was little changed at 4.46% Japan’s 10-year yield was little changed at 2.595% Australia’s 10-year yield declined five basis points to 5.01% Commodities
West Texas Intermediate crude rose 0.5% to $101.48 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
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