US economy

Wall Street in cautious mood as investors eye trade and possible shutdown


Wall Street kicked off the new week on cautious footing on Monday as investors weigh the start of a new round of US and China trade talks against the spectre of another potential US government shutdown.

The S&P 500 eked out a narrow 0.1 per cent gain in opening trade, the Dow Jones Industrial Average was largely unchanged while the Nasdaq Composite rose 0.3 per cent.

Industrials and information technology were the day’s top performing sectors on the S&P 500, advancing 0.6 per cent and 0.3 per cent respectively. At the bottom were materials and communications services, both of which were trading 0.2 per cent lower.

The tepid moves come as trade talks between the US and China resume in Beijing today. Officials on both sides will pick up where they left off last month when discussions in Washington ended without a deal.

The two countries are trying to hash out their differences over trade, tariffs and intellectual property rights ahead of a March 1 deadline when US tariffs on about $200bn worth of Chinese imports will increase from 10 per cent to 25 per cent.

An escalation in levies between the world’s two most important economies could have serious knock on effect on the wider global markets, which have already been rattled by signs of decelerating growth in China.

Data out earlier on Monday showed that consumer spending growth in China over the lunar new year period slowed to its weakest level since 2015. That has added to concerns over the outlook for the Chinese economy after the country recorded its slowest annual pace of economic growth in almost three decades in 2018.

Along with news on the trade front, investors will also have their eyes on the budget impasse in Washington this week. The government closed for a record 35 days from late December to late January, when Mr Trump signed a three-week spending bill that temporarily reopened agencies. Republicans and Democrats have since been locked in talks to try and resolve their differences over immigration and a $5.2bn proposal to extend a wall along the US-Mexico border. If no deal is reached before Friday’s deadline, then the government will shut down again.

Treasuries were modestly weaker, pushing yields higher. Yield on the benchmark 10-year note was up 2 basis points at 2.65 per cent. The dollar continued its strong run from last week, with the DXY index tacking on 0.4 per cent to a near seven-week high of 97.05. The gains were helped by weaknesses in both sterling and the euro, which retreated amid weak economic data and persistent Brexit uncertainty.



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