U.S. stocks rise, reflecting expectations for U.S.-China negotiations

U.S. stocks opened mixed on news of U.S.-China tariffs. However, gains came as White House trade advisor Navarro announced that there will be a Trump-Xi meeting sometime today. On top of that, despite sluggish employment data, the company pays more attention to weak dollar, falling interest rates and tariff issues than to economic instability. Of course, expectations have continued despite media reports that there will be no phone call between Trump and Xi Jinping during the day. This is evidenced by the strength of Chinese companies. In addition, the strength continued, reflecting expectations for negotiations even after Trump claimed that China’s imposition of tariffs on the U.S. was okay, and that he had no phone call with Xi Jinping, but that he would do so at an appropriate time. (Dow +0.30%, Nasdaq +1.35%, S&P 500 +0.72%, Russell 2000 +1.41%, Philadelphia Semiconductor Index +1.05%)

*Variants: U.S.-China trade dispute, sluggish employment indicators

With U.S. tariffs on China in effect, China also announced tariffs on some U.S. items. This is presumed to be the imposition of tariffs under the U.S. government’s official gazette system and China’s response amid a phone call between Trump and Xi Jinping. In the end, it marks the beginning of the trade war between the U.S. and China after the trade dispute progressed in 2018. However, it suggests China’s reconciliatory position in that China limited it to some items, not extensive tariffs.

Meanwhile, White House trade adviser Peter Navarro mentioned that the U.S.-China call on tariffs is scheduled to take place today and let’s wait and see what happens. On top of that, he claimed that a successful Trump trade move would lead to a structural shift in the U.S. economy from excessive dependence on income taxes to tariff imports. He mentioned that $1 trillion has been going abroad every year due to trade deficits. In addition, Grier, the trade representative candidate, announced that he would readjust Article 301 tariffs on China.

In addition to economic indicators, the U.S. dollar weakened, interest rates fell, and the stock market rose. However, the impact of the trade dispute remains as the stock market slowed down after some media reported that Trump and Xi would not talk by phone today. Before the market closed, Trump said in a press conference after signing a memorandum of sanctions against Iran and withdrawing from the U.N. Human Rights Council that China’s retaliatory tariffs are okay. He did not have a phone call with Xi, but announced that he would not hurry and talk with him at an appropriate time.

Meanwhile, the number of U.S. job openings fell by 55.6 million from 8.156 million to 7.6 million, cooling the job market. The employment rate remained unchanged at 3.4 percent with 5.5 million people employed. Professional and businesses decreased by 225,000, education and medical services by 19.4 million, and financial and insurance by 13.6 million. As the results of wildfires are estimated to have affected them, anxiety over the results of the employment report released on Friday is highlighted. As a result, the dollar weakened and interest rates on government bonds fell.

*Featured stocks: Alphabet down 6% after-hours. AMD down 2%; Broadcom up 5% on Alphabet effect

Nvidia (+1.71 percent) rose as it was highlighted that Trump and Xi Jinping are set to have a phone call despite the news of the U.S.-China tariffs. There has been controversy over whether there will be an intraday call, but overall stock prices have also been affected by the sentiment to buy back from the recent decline. It was also affected by the surge in the German market after German chipmaker Infineon (+10.37%) raised its sales forecast for this year from a decline to a slight increase. TSMC (+2.13%), ARM (+4.21 percent), Broadcom (+2.16%), Qualcomm (+1.64%) and Micron (+0.82 percent) also rose. As a result, the Philadelphia Semiconductor Index rose 1.05%. AMD (+4.58%) beat expectations while EPS was in line with expectations. However, the data center fell below expectations. Q1 expected sales fell 2% after hours.

Despite significant sales declines in Sweden following California and Europe’s France, Tesla’s (+2.22 percent) share rose due to delays in tariffs on Canada and Mexico, and phone calls with China. While Rivian (+3.87%) and Lucid (+4.32 percent) are clearly strong, secondary battery makers such as Quantum Skape (+2.01%), Albemarle (+2.52%) and Lithium America (+6.62%) are also rising. Rising prices of carbon lithium in China are also influencing the rise of related stocks. Automotive parts makers such as GM (+1.40 percent), Ford (+2.73 percent), Stellantis (+4.12 percent) and Magna International (+1.64%), Rear Copper (+2.07%) and Adiant (+3.11 percent) are also strong

Apple (+2.10%) succeeded in rising, leaving behind the previous day’s drop as news broke that it was set to have a phone call between Trump and Xi Jinping. Amazon (+1.95%) continued to rise on the prospect of Amazon benefiting from the damage to Chinese low-end apps Shein and Temu due to the trade dispute with China. Meta Platforms (+0.96%) rose as it announced a $20 billion investment in AR/VR this year to expand sales of smart glasses. MS (+0.35%) is limited as concerns over slowing cloud service sales still persist. Alphabet (+2.50%) posted below-expectations for revenue, especially cloud sales, after the market closed. It reported a capital spending outlook of $75 billion this year, up from $58 billion. It fell by 6% after-hours. Nvidia, on the other hand, is up 1% and Broadcom is up 5%.

Chinese retail distribution sectors such as Alibaba (+3.79 percent), Pinduoduo (+8.37 percent) and Jindong Dotcom (+2.82 percent), Chinese electric vehicles such as Nio (+2.57 percent), Xpeng (+8.29 percent) and Li Auto (+5.99 percent), and technology stocks such as Baidu (+5.89 percent) rose despite the U.S.-China tariffs. The fact that Trump and Xi are set to have a phone call is estimated to have affected the move. On top of that, the fact that some retaliatory tariffs by China are limited to some items, not broad, also suggests a reconciliatory stance by China. Canadian companies such as Spotify (+4.20 percent), Canadian National Resources (+3.23%) and Canadian National Railways (+3.03%) rose on news of the tariff delay.

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