July 10 New York

Pinestone Investments

The DJIA fell by 5.82 points to 21408.52 while the S&P 500 Index rose by 2.25 points to 2427.43.  The Nasdaq Composite Index added by 23.314 points to 6176.393 while the Nasdaq 100 Index gained by 37.682 points to 5694.152.  The yield on 10-year Treasuries fell 1.3 basis points to 2.373 percent and the yen dropped 0.12 to 114.04 per U.S. dollar.  WTI crude futures added 38 percent to settle at $44.40 a barrel following its 2.83 percent slide Friday.  Technology shares drove gains in U.S. equities, while natural gas and crude lifted commodities.  The U.S. dollar strengthened with Treasuries as investors prepare to check second-quarter earnings for more evidence global economic growth is back on track.  The S&P 500 Index rose for a second day as tech shares rebounded from last week’s selloff.  With global stocks close to all-time highs, investors are shrugging off political uncertainty and placing their faith in a continued earnings expansion on broadening global growth.  German’s trade surplus was higher than estimated as May exports beat forecasts, while U.S. employers added the most jobs in four months in June.  The Group of 20 nation meeting in Hamburg agreed to fight protectionism while tacitly recognizing President Trump’s concerns about excess steel capacity and what he says are unfair trade practices.  On climate change, the U.S. was again isolated, with all 19 other members agreeing that the Paris accord on cutting harmful emissions was irreversible.  World leaders forged a fragile compromise at a summit in Germany that failed to conceal the reality that Donald Trump’s America is increasingly going its own way.  The last global summit, the G-7’s meeting in May, saw huge divisions over climate and trade and this meeting was no different.  Leaders are concerned about a potential trade war over steel as Trump gears up for a decision whether to impose punitive tariffs amid ongoing complaints about dumping on global markets.  The final G-20 statement pledged renewed efforts to combat excess capacity in the steel industry, while referring to the use of “trade defense instruments.”  Thus, despite some compromises, the U.S. still has a mechanism at hand to declare a trade war at any time.  In response to an assertion by Trump that he will always defend American workers, France’s Emmanuel Macron gave the example of his Apple iPhone: Designed in the U.S., made in China with some U.S. parts, and sold in Europe, it illastrates the benefits of globalization.  It’s a “profound mistake” to judge the benefits of trade through the prism of deficits or surpluses, Macron told reporters at the summit close.  “Protectionism and dumping are both bad answers to our problems.”

Kazuhide Matsuishi

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