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Dow rebounds after Steven Mnuchin ignites trade optimism

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The Wall Street Journal is reporting that the Trump administration may require all 5G equipment used inside the US to be made outside of China. CNN's Christine Romans has the details.

Posted: Jun 26, 2019 9:22 AM
Updated: Jun 26, 2019 4:15 PM


The Dow traded higher on Wednesday, thanks to optimism about a US-China trade deal.

The Dow was up 0.2%, or 45 points, in early afternoon trading. The S&P 500 gave back some of its gains and was flat, albeit in positive territory. The Nasdaq Composite was up 0.4%

With only three trading days left in June, the Dow, S&P and Nasdaq are on track for their best month since January. The Dow climbed 2.6% so far in the second quarter, while the S&P and the Nasdaq are up 3% and 2.4%.

Wednesday's upswing follows a weak market performance Tuesday. The higher futures come on the coattails of comments made by Treasury Secretary Steven Mnuchin, who said a trade deal with China was close to done.

'We were about 90% of the way there and I think there's a path to complete this,' Mnuchin said in an interview with CNBC.

President Donald Trump is set to meet China's President Xi Jinping on the sidelines of the G20 summit in Japan this week to talk trade.

On top of that, the US could suspend further tariffs on Chinese imports as negotiations resume, according to a Bloomberg report.

'Resuming trade talks seems to be the best attainable result of the Trump-Xi meeting at the G20 summit. But even then, there are too many bridges to be crossed for a smooth path towards a deal,' cautioned Raoul Leering, head of international trade analysis at ING.

The United States knows that China won't strike a deal at any price, Leering added. The breakdown of talks in May also changed expectations for the market, and resuming talks may not be enough to keep sentiment going for long.

Leering expects a deal to be agreed in the fourth quarter.

Just like stocks, oil prices are also being supported by optimism for the G20 summit, as well as the hopes that OPEC will extend production cuts. US oil prices were up 2.8% at $59.42 a barrel.

Elsewhere, gold prices, which recently rose to a six-year high, are taking a breather. The tensions between the United States and Iran also seem to be cooling off — or, at least, are not escalating. Gold is a safe haven investment and tends to rise in value during times of uncertainty. Gold prices were down 0.1% at $1,413.30.

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