U.S.-China Trade Talks Continue for Second Day in London
U.S. Commerce Secretary: "Talks Are Progressing Smoothly"... Discussion on Easing Export Controls
CPI to Be Announced on the 11th, PPI on the 12th
The three major indices on the New York Stock Exchange opened mixed in early trading on June 10 (local time), hovering near the flatline. The market is taking a breather as it closely watches the ongoing U.S.-China trade talks in London, which have entered their second day.
As of 10:20 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was down 1.90 points (less than 0.1%) at 42,759.86. The large-cap S&P 500 was up 13.81 points (0.23%) at 6,019.69, while the tech-heavy Nasdaq was up 59.79 points (0.31%) at 19,651.01.
The high-level U.S.-China trade talks in London continued for a second day. U.S. Secretary of Commerce Howard Lutnick said the discussions were "progressing smoothly and we are spending a lot of time together," adding that he expected the talks to last all day. This meeting is the second round of talks, following the first round held last month in Geneva, Switzerland. In the Geneva talks, both countries agreed to lower tariffs on each other by 115 percentage points. In the current round, the focus is on export control issues. Secretary Lutnick, who oversees U.S. export control policy, joined the second round of negotiations, apparently for this reason.
Kevin Hassett, Chairman of the White House National Economic Council (NEC), said in an interview with CNBC the previous day that "U.S. export restrictions will be eased, and China will release a large amount of rare earths." The UK’s Financial Times (FT) reported that if China increases its rare earth exports to the U.S., the U.S. could ease restrictions on semiconductor sales to China.
Investors are hoping that the talks will help ease U.S.-China trade tensions. Adam Parker, founder of Trivariate Research, said, "Most people believe that talking is better than not talking, and we think we're making progress in the trade negotiations," adding, "Investors do not want to sell stocks."
There is also keen attention on a series of inflation indicators to be released this week. The Consumer Price Index (CPI) for May, to be announced on June 11, is expected to have risen 2.5% year-on-year, up from 2.3% in April. The Producer Price Index (PPI), often called 'wholesale prices,' will be released a day later on June 12. The May PPI is projected to have increased by 0.2% from the previous month, reversing from a 0.5% decline in April. The PPI typically impacts the CPI, or 'retail prices,' with a time lag. Investors are expected to use these indicators to assess the impact of President Donald Trump's tariff policies on inflation. On June 13, the University of Michigan Consumer Sentiment Index and inflation expectations will be released.
U.S. Treasury yields are slightly weaker. The yield on the benchmark 10-year Treasury note, a global bond market benchmark, is down 1 basis point (1bp=0.01 percentage point) from the previous session at 4.46%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, is also down 1 basis point from the previous session at 3.98%.
By stock, food company JM Smucker is plunging 13.38%. The company’s earnings outlook for the upcoming fiscal year fell short of market expectations, triggering heavy selling. Taiwan's TSMC is up 2.57% after reporting a 40% surge in May sales. Tesla is rising 2.27%. Optimism over a possible reconciliation between CEO Elon Musk and President Trump is reflected in the market, after Musk expressed support for Trump’s hardline response to the immigrant protest in Los Angeles (LA), despite the two having previously declared a 'split.'
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