North American stocks jump on Friday as China-U.S. trade spat continues
Dow Jones Industrial Average, S&P 500 and Nasdaq closed the week up a per cent or two each
U.S. stocks jumped in another wild day on Wall Street, but the falling value of the U.S. dollar and other swings in financial markets suggest concerns about President Donald Trump's trade war remain high.
The S&P 500 rose 1.8 per cent Friday after veering between gains and losses, closing a historic week full of monstrous swings. The Dow Jones Industrial Average went from an early loss of nearly 340 points to a gain of 810 before closing with a gain of 619 points, or 1.6 per cent. The Nasdaq composite rose 2.1 per cent. Stocks kicked higher as pressure eased a bit from within the U.S. bond market.
In Canada, the S&P/TSX composite index was up 2.5 per cent to close out the week.
The shaky trading came after China announced Friday that it was boosting its tariffs on U.S. products to 125 per cent in the latest tit-for-tat increase following Trump's escalations on imports from China. China's countermeasures will take effect on Saturday.
"The U.S. alternately raising abnormally high tariffs on China has become a numbers game, which has no practical economic significance, and will become a joke in the history of the world economy," a Chinese Finance Ministry spokesperson said in a statement announcing the new tariffs.
"However, if the U.S. insists on continuing to substantially infringe on China's interests, China will resolutely counter and fight to the end."
Rising tensions between the world's two largest economies could cause widespread damage and a possible global recession, even after Trump recently announced a 90-day pause on some of his tariffs for other countries, except for China.
"We remain in the early innings of this global trade regime change, and while the 90-day pause on reciprocal tariffs temporarily reversed the market selloff, it does prolong uncertainty," according to Darrell Cronk, president of Wells Fargo Investment Institute.
U.S. government bond yields rise slightly
While the bond market is typically the more boring corner of Wall Street, it's been flashing serious enough signals of stress this week that it's demanded the attention of both Wall Street and Trump.
The yield on the 10-year Treasury topped 4.58 per cent in the morning, up from just 4.01 per cent a week ago. That's a major move for a market that typically measures things in hundredths of percentage points. Such jumps can drive up rates for mortgages and other loans going to U.S. households and businesses, which would slow the economy.
Bonds, which are essentially IOUs from the U.S. government, are typically viewed as a safe haven for investors during times of instability. But instead of flocking to them as markets fluctuated wildly this week, investors were ditching U.S. government bonds given the U.S. government's tariff policy was the source of the instability.
Treasury yields eased back throughout the afternoon, and the 10-year yield regressed to 4.48 per cent.
Susan Collins, president of the Federal Reserve Bank of Boston, told the Financial Times that the Fed "does have tools to address concerns about market functioning or liquidity should they arise" and "would absolutely be prepared" if markets become disorderly.
The value of the U.S. dollar also fell again Friday against everything from the euro to the Japanese yen to the Canadian dollar. Meanwhile, gold, another place where investors have instinctively flocked when fear is high, rose to bolster its reputation as a safe haven.
In stock markets abroad, indexes were scattershot around the world. Germany's DAX lost 0.9 per cent, but the FTSE 100 in London added 0.6 per cent as the government reported the economy, the world's sixth largest, enjoyed a growth spurt in February. Japan's Nikkei 225 dropped three per cent, while Hong Kong's Hang Seng climbed 1.1 per cent.
Chinese markets rallied after President Xi Jinping met with Spanish Prime Minister Pedro Sanchez and Beijing announced plans for Xi to visit Vietnam, Malaysia and Cambodia.
China has been seeking to join forces with other countries, apparently in hopes of forming a united front against Trump. The world's second-largest economy is also ramping up its own countermeasures to Trump's tariffs.
With files from Reuters and Abby Hughes