Stock Market Near Record on Topsy Turvy Thursday

Several market moving events unfolded between the close of U.S. stock markets on Wednesday and the open on Thursday. As a result, the Dow Jones Industrial Average and the S&P 500 were both on the cusp of record highs on Thursday.

Here’s what investors need to know.

Delayed tariffs
Stock futures climbed Wednesday evening after President Donald Trump announced he would be delaying the planned increase of tariffs on Chinese goods by 15 days, as a “gesture of good will.” The tariffs are set to increase to 30% from 25% on about $250 billion worth of Chinese goods. Treasury Secretary Steven Mnuchin told CNBC on Thursday morning that the president “could do a deal any time” with China but won’t until “it’s a good deal.”



“The president delayed it because of a request from the vice premier,” Mnuchin added. He clarified that China’s Vice Premier Liu He made the request because Oct. 1 is the 70th anniversary of the establishment of the People’s Republic of China and said raising the tariffs on that day “caused them grave concern on the symbolism.”

ECB lowers rates
On Thursday morning the European Central Bank (ECB) announced a cut to its deposit rates by 10 basis points, to negative 0.5%. The ECB also announced a substantial bond-buying program of 20 billion euros per month, as a part of its quantitative easing (QE) initiative. The Euro initially fell to its lowest level against the dollar in nearly two weeks but later rebounded, sitting at around $1.104, as foreign exchange investors remain uneasy about whether the ECB’s policies will successfully increase inflation. Additionally, bond yields in the Euro zone dropped, with Germany’s benchmark 10-year bond yield falling to negative 0.64%.

Investors were pleased the ECB was trying quantitative easing again, hoping the new program would give the global economy a jolt.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza