US stocks turn higher as investors weigh trade threat; dollar gains

Bloomberg

US stocks turned higher and Treasuries trimmed gains as investors speculated that President Donald Trump’s tough tariff talk won’t translate into the most severe protectionist policies.
S&P 500 cut an early slide by three-quarters after hedge fund billionaire Ray Dalio called Trump’s threat of a trade war “political show.” Treasuries held gains on a haven bid, while the greenback rose versus most peers with the Canadian dollar leading losses. West Texas crude advanced to around $62 a barrel.
In Europe, the broadest measure of the region’s equities halted a four-day slide after a major breakthrough on the path to a German government. Italy’s stocks and bonds were the standout losers as anti-establishment political groups surged in Sunday’s election.
The Italian election result and Germany’s move towards a coalition kick off a busy week for macro events. Both the Bank of Japan and European Central Bank will meet to decide on interest rate policy, while China hosts its National People’s Congress. Overshadowing it all, however, will be the next developments on global trade after US President Donald Trump riled markets with his proposed tariffs last week. America won’t lower duties on steel and aluminum from Mexico and Canada unless the two countries agree to a revamped Nafta, he said.
“It’s all about the steel tariffs, aluminum tariffs, and how that’s going to affect world trade,” Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, said.
Elsewhere, West Texas oil advanced as geopolitical risk resurfaced, with a halt at Libya’s biggest crude field sparking speculation that supply will tighten and help reduce a global glut. Shanghai stocks bucked regional weakness as China kept its 2018 growth target of around 6.5 percent.
The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20. Reserve Bank of Australia monetary policy decision on Tuesday, with GDP data due on Wednesday. The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing. BOJ monetary policy decision and briefing on Friday.
The S&P 500 Index rose 0.3 percent as of 11:01 am New York time. The Stoxx Europe 600 Index increased
0.9 percent, the first advance in a week. The MSCI Emerging Market Index fell 0.8 percent with its fifth consecutive decline. The UK’s FTSE 100 Index rose 0.1 percent.
The Bloomberg Dollar Spot Index gained 0.2 percent. The euro rose less than 0.1 percent to $1.2322. The British pound advanced 0.2 percent to $1.3824. The Japanese yen was steady at 105.77 per dollar, the strongest in about 16 months.
The yield on 10-year Treasuries dipped two basis points to 2.85 percent. Germany’s 10-year yield declined three basis points to 0.63 percent, the lowest in more than five weeks.