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It felt like a body blow for stocks on May 24 when U.S. President Donald Trump’s cancellation of talks with North Korea’s Kim Jong-un sent the S&P 500 down a quick 1 per cent. But by session’s end, the loss had shrunk by three-quarters.

A few days later, the summit was back on.

Last weekend sounded as ominous, with headlines blaring U.S.-China talks had stalled and world leaders calling for “decisive action” to counter U.S. tariffs. The market verdict? Equities staged the biggest rally since April 10.

For investors, the trade war sounds more and more like a war of words, filled with sound and fury but signifying little, to date, that puts corporate earnings at risk. In short, markets are adjusting to a negotiating pattern in which a normal-course political discussions happen publicly, rather than in private.

“Investors are getting used to the idea of that as part of the process,” said Stephen Lee, a founding partner at Logan Capital Management. “It seems like all sides are going to say things that they could do. But just because they’re saying things that they could do it doesn’t necessarily mean they will be things that actually happen.”

Concern about trade tensions kept investors up at night from March through May. Mr. Trump’s tariffs on Chinese goods and steel and aluminum imports prompted some of the United States’ closest allies to vow of tit-for-tat measures. The International Monetary Fund warned of a trade war that could undermine global growth. But as weeks of back and forth wore on, U.S. investors have started to see their attention sway.

“We heard nothing but a bull horn in our face about trade,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The more a bull horn is in your face, the less attention you pay to it unless some new piece of information comes out.”

Resilience was on display on Friday and Monday, when the MSCI World Index had the biggest two-day gain in two months. Rather than obsess over international commerce, bulls were more interested in the profit picture. JPMorgan Chase & Co.’s Mislav Matejka upgraded U.S. stocks to overweight amid optimism over earnings growth. Canaccord Genuity’s Tony Dwyer raised his year-end target for the S&P 500 to 3,200, a Street high, from 3,100.

After weeks of sideways trading, the S&P 500 has started showing sings of buoyancy, recently rising above the 2,740 level that has served as a three-month ceiling. Small-cap stocks and the FANG Index of tech heavyweights notched new records. The Nasdaq Composite Index is posed to close at an all-time high on Tuesday. The MSCI All Country World Index is attempting to break above its 100-day support line.

All that’s not to say that geopolitical concern doesn’t linger – the S&P 500 still sits fairly close to the half-way point between this year’s highs and lows. Increasingly, though, events on the trade calendar are viewed as much as bullish catalysts as bearish. A summit in Singapore where Mr. Trump is set to hold the first meeting with North Korea’s Kim Jong-un is scheduled for June 12.

“The market always needs something to focus on. And when there are other things to focus on that are positive, you’ll see the market will move in that direction,” said Quincy Krosby, the chief market strategist at Prudential Financial Inc. “As we get into the summer, volume tends to dip. Therefore what can happen is headlines can skew the market dramatically in one direction or another.”

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