· U.S. stocks dipped on Tuesday, reversing earlier intraday record highs, following a report that the United States would likely maintain tariffs on Chinese goods until after November’s presidential election.
The Dow Jones Industrial Average .DJI ended up 0.11% at 28,939.67 points, while the S&P 500 .SPX lost 0.15% to 3,283.15.
The Nasdaq Composite .IXIC dropped 0.24% to 9,251.33.
The eventual removal of tariffs by Washington would depend on Beijing’s compliance with the Phase 1 trade accord, which is expected to be signed on Wednesday, Bloomberg reported, citing sources.
The Dow Jones Industrial Average, S&P 500 and Nasdaq each touched intraday record highs before losing ground in afternoon trade. The Dow ended the session with a modest gain.
China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal.
Analysts expect profits at S&P 500 companies to drop 0.5% for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by the prolonged Sino-U.S. trade war.
· Many stock markets globally have continued their strong run into the new year — so it’s time to start taking some profits while waiting for another opportunity to reenter the markets, an investor said on Tuesday.
“I’m actually starting to think about trimming back some of the exceptional gains we had last year and coming through into this,” Simon Fentham-Fletcher, chief investment officer at Freedom Asset Management, told CNBC’s “Capital Connection.”
“So from my perspective, yes, I think it is time to start taking 1, 2, 3% off and ... put away some cash (so) that you can come in when there’s a 5 to 10% correction,” he added.
Fentham-Fletcher predicted that the S&P 500 could rise by 15% by the end of this year. He said the climb in the stock index will likely be driven by an improvement in corporate earnings amid a still-strong U.S. economy.
But if earnings don’t recover and continue to slide, the stock market could correct — and investors with some cash on hand could find a window to invest again, he explained.
· Asia Pacific markets traded mixed on Wednesday ahead of the U.S. and China signing a phase one trade deal.
Nikkei shares in Japan were down 0.23% after the first half-hour of trade while the Topix index fell 0.19%. In South Korea, the Kospi index slipped 0.43%.
Australia’s benchmark ASX 200 bucked the downward trend and rose 0.34%, with most sectors trading up.
The session followed a muted finish on Wall Street overnight where major investment banks posted quarterly earnings.
Officials from the U.S. and China are expected to sign the trade agreement on Wednesday after the two countries last month agreed to the deal in principle, where Washington said it would cancel or reduce some tariffs in exchange for China purchasing more American products and addressing U.S. concerns on areas of technology and financial services.
Reference: CNBC, Reuters
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