We have seen a marked turnaround in US stocks this afternoon (DJIA +1.0%, S&P +1.2%, NASDAQ +1.5%). 

US Closing Report (by Sigma Squawk)

The major bourses opened firmly in negative territory earlier today, weighed by trade war concerns after China announced retaliatory measures to the US import tariffs. Perceived safe-haven assets had also rallied in response but gains began to dissipate through the European/US crossover and US stocks have continued higher since. 

The Japanese has also slipped towards the bottom of the G10 pile while Treasuries are now in the red. The improvement in risk sentiment was also boosted by a stronger ADP print (241K v 210K) ahead of Friday’s jobs report. 

Other releases were less encouraging however as ISM non-manufacturing and factory orders missed forecasts. Elsewhere in FX, the Canadian Dollar received a boost amid reports that US President Trump has softened a key NAFTA demand on automotive content. 

Not long before, Canadian Foreign Minister Freeland said the US and Canada are making progress on NAFTA talks. With regards to the US-China dispute, a White House Official said policymakers are aware of market reaction to trade measures but consider economic fundamental and long-term trends more compelling. He added that no new actions are planned but could come in the future. 

The White House also said they are going through a review period on Chinese tariffs and it will be a couple of months before they are implemented. In energy space, oil prices are well off the earlier lows with US crude futures settling at $63.37 (-$0.14).

Key Headlines/Data:

* Spanish Foreign Minister said he hopes to sign off on a bilateral trade deal with the UK on Gibraltar before October. He added that Spain wants to reclaim Gibraltar but will not hold the Brexit deal hostage.

* White House Official said policymakers are aware of market reaction to trade measures but consider economic fundamental and long-term trends more compelling. He added that no new actions are planned but could come in the future.

* White House says they are going through a review period on Chinese tariffs and it will be a couple of months before they are implemented. He added that they will go ahead with measures if China does not make changes.

* US Trade Official said the US does not have a firm deadline for the final tariff list against China, and there may continue to be talks over trade with China.

* Canadian Foreign Minister Freeland said the US and Canada are making progress on NAFTA talks.

* US crude oil futures settled at $63.37 (-$0.14) | Brent crude futures settled at $68.02 (-$0.10).

* US President Trump is said to have softened a key NAFTA demand on automotive content.

 



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