Market Headlines – 9/3/2018

US

• US stocks rose after President Donald Trump announced tariffs that were narrower than some traders had anticipated.
• The S&P 500 advanced for the fourth time in five days, rising 0.4%, as investors found relief in the president’s decision to exclude Canada and Mexico while giving other countries wiggle room from levies on imports of steel and aluminium.
• The dollar rose against the euro after the European Central Bank’s decision to drop a pledge to increase asset purchases if necessary, and as President Mario Draghi downplayed the change.

Europe

• European stocks gained 1.1% after Mario Draghi says the improvement in the euro-area economy justifies the ECB’s decision to drop its pledge to expand QE if needed.
• In policy news, at the ECB meeting yesterday the central bank reiterated its promise to buy more bonds until inflation accelerates. Two additional key takeaways were the elimination of the easing bias of the asset purchase program and the inflation and GDP forecasts which remained broadly stable.
• The most significant development in the ECB’s monetary policy meeting was the removal of the easing bias of the asset purchase program. Previously, the introductory statement had indicated: “If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the asset purchase programme (APP) in terms of size and/or duration.” The deletion of those words is consistent with a gradual shift in the communication of the ECB as it moves toward the exit of quantitative easing.

Asia

• Asian shares climbed after U.S. President Donald Trump agreed to meet North Korean leader Kim Jong Un, and Trump announced tariffs that were narrower than some traders had anticipated. Japanese equities gained 0.5% while Chinese equities advanced 0.6%.