Easing Geopolitical Concerns May Fortify US Stocks

By Investors Hub

The major U.S. index futures are pointing to a sharply higher opening on Tuesday, with stocks likely to see further upside after turning positive over the course of the previous session.

The upward momentum on Wall Street comes amid easing geopolitical concerns following reports that North Korea is willing to talk about denuclearization.

South Korea’s national security director Chung Eui-yong told reporters North Korea would be willing to denuclearize if its security was guaranteed.

?North Korea made clear its willingness to denuclearize the Korean peninsula and the fact there is no reason for it to have a nuclear program if military threats against the North are resolved and its regime is secure,? Chung said.

Easing concerns about a global trade war may also lead to strength on Wall Street after President Donald Trump indicated proposed tariffs on steel and aluminum imports would be removed if the U.S. negotiates a “new & fair” NAFTA agreement.

Stocks showed a significant turnaround over the course of the trading session on Monday after an initial move to the downside.

The Dow jumped 336.70 points or 1.4 percent to 24,874.76, the Nasdaq surged up 72.84 points or 1 percent to 7,330.70 and the S&P 500 spiked 29.69 points or 1.1 percent to 2,720.94.

The rebound on Wall Street reflected recent volatility in the markets amid uncertainty about a potential global trade war and an increase in interest rates.

Lingering concerns about a trade war contributed to the initial weakness, as President Donald Trump plans to implement tariffs on steel and aluminum imports.

In a post on Twitter, Trump indicated that the tariffs on steel and aluminum would only be removed if the U.S. negotiates a “new & fair” NAFTA agreement.

“We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” Trump tweeted.

He added, “Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying.”

Trading activity was somewhat subdued, however, as traders looked ahead to the Labor Department’s monthly employment report due to be released on Friday.

On the U.S. economic front, the Institute for Supply Management released a report showing a slight slowdown in the pace of growth in the service sector in the month of February.

The ISM said its non-manufacturing index edged down to 59.5 in February from 59.9 in January, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to dip to 59.0.

The modest decrease by the index was partly due to a slowdown in the pace of job growth in the service sector, as the employment index dropped to 55.0 in February from 61.6 I January.

Brokerage stocks showed a significant move to the upside on the day, driving the NYSE Arca Broker/Dealer Index up by 2.2 percent.

Utilities, energy and chemical stocks also moved notably higher on the day, moving to the upside along with the other major sectors.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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