US stocks pare some gains on tariff jitters; dollar declines

Bloomberg

Stock advances on Monday were tempered by uncertainty over the prospect of new tariffs, but many investors remain bullish following last week’s report of stronger US jobs growth. Treasuries gained, while the dollar and most commodities fell.
The S&P 500 Index opened higher— anchored by consumer, energy and tech shares but held back by industrial stocks, which would suffer more than most in a trade war. The Stoxx Europe 600 Index was poised for the longest winning streak since October, as utility companies set the pace, while gauges from Tokyo to Sydney jumped.
Strong economic indicators seem to have given fresh impetus to the nine-year-old bull market in global equities, but stocks have been roiled lately as US President Donald Trump raised the prospect of a full-fledged trade war.
“As we move forward the focus will remain on trade and tariffs and the potential for some shot across the bow for the Chinese given some of the recent Trump tweets,” Brad Bechtel of Jefferies said in a note. “To the extent Trump continues to pick ‘smaller’ items to focus in regards to trade the better, but if he ramps it up even further and that sparks significant retaliation then things could get ugly.”
With data due from China this week as well as readings on US inflation and retail sales, investors will be looking for more reasons to keep the party going.
“With earnings season wrapped up, tax reform launched, and steel and aluminum tariffs to take effect soon, investors will have plenty to ponder,” John Stoltzfus, the chief investment strategist of Oppenheimer & Co., wrote in a note to clients.
“We believe patience, fortitude and an eye for opportunities that could present themselves as interest rates work through the process of normalisation, trade negotiations garner attention and equity markets respond to it all, could prove rewarding.”
The yen strengthened as political clouds gathered around Japan’s Finance Ministry, run by a stalwart ally of Prime Minister Shinzo Abe. Finance Minister Taro Aso is under pressure after his ministry altered documents tied to a controversial land sale.
Elsewhere, Bitcoin was set for the first increase in five weekdays and West Texas crude nudged lower after last week’s advance. Emerging-market stocks surged.
China data on industrial production, retail sales and fixed-asset investment all out on Wednesday are likely to point to slower growth, according to Bloomberg Economics forecasts. Key indicators for the Fed dominate the economic agenda in the coming week. The US Treasury will sell $21 billion of 10-year notes and $13 billion 30-year bonds at March 12-13 auctions, plus $28 billion of three-year notes, the most since 2014. Last month’s auction of those maturities drew lackluster demand. Prices and factory output are focal points in the euro area.
The S&P 500 Index climbed 0.2 percent in New York, to the highest in more than five weeks. The Stoxx Europe 600 Index rose 0.3 percent, its sixth consecutive advance. The UK’s FTSE 100 Index declined 0.1 percent. The MSCI Emerging Market Index gained 1.3 percent to the highest in more than five weeks.
The Bloomberg Dollar Spot Index dipped 0.1 percent. The euro rose less than 0.05 percent to $1.2308. The British pound gained 0.2 percent to $1.3884. The Japanese yen rose 0.3 percent to 106.55 per dollar.
The yield on 10-year Treasuries declined one basis point to 2.89 percent. Germany’s 10-year yield dipped two basis points to 0.63 percent. Britain’s 10-year yield rose one basis point to 1.498 percent.