U.S. stock markets finished mixed on Monday as investors waited for a crucial meeting between President Donald Trump and his Chinese counterpart Xi Jinping later this week. Moreover, Iranian crisis intensified as U.S. government imposed more sanction on the oil rich country. Consequently, price of gold soared as investors shifted to safe haven precious metals. The S&P 500 and Nasdaq Composite closed in the red while the Dow managed to gain marginally.
The Dow Jones Industrial Average (DJI) gained 8.41 points to close at 26,727.54 The S&P 500 lost 0.2% to close at 2,945.35. Meanwhile, the Nasdaq Composite Index closed at 8,007.70, shedding 0.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 0.9% to close at 15.26. A total of 6.31 billion shares were traded on Monday, lower than the last 20-session average of 7.05 billion. Decliners outnumbered advancers on the NYSE by a 1.44-to-1 ratio. On Nasdaq, a 2.27-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in positive territory with 19 components of the 30-stock blue-chip index closing in the green while eleven finished in the red. The tech-heavy Nasdaq Composite ended in the red due to weak performance by large-cap stocks. The S&P 500 also closed in negative territory. The Energy Care Select Sector SPDR (XLE) lost 0.9%. Notably, six out of total 11 sectors of the benchmark index closed in the red while five ended in the red.
Trump – Xi Meeting in Focus
On Jun 18, President Trump tweeted that he had a very good telephonic conversation with Chinese President Xi Jinping. He added: “We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.” The G-20 summit of developed nations is scheduled for Jun 28-29 at Osaka.
Notably, U.S.-China trade negotiations broke down abruptly on May 5 when market participants believed a near-term deal was possible. The United States blamed China for backtracking on its previously given commitments. So far, the United States has imposed 25% tariffs on $250 billion Chinese goods. China has retaliated by levying 25% tariff on $160 billion U.S. exports.
Additionally, President Trump had threatened imposing 25% tariffs on another $300 billion of Chinese goods if stalemate prevails in trade negotiations for an indefinite time period.
Geopolitical Tensions in Iran Escalate
Geopolitical conflict in Iran intensified on Jun 13 when two oil tankers were set on fire in the Strait of Hormuz, for which the United States blamed Tehran. On Jun 20, Revolutionary Guard of Iran claimed that it shot down a U.S. drone near the Strait of Hormuz. Iran alleged that the drone had entered its sky, which the U.S. military claimed as international airspace.
On Jun 24, President Trump signed an executive order imposing tough new sanctions on Iran. The new sanctions will deny Iran Supreme Leader Ayatollah Ali Khamenei and his office to access key financial resources. Notably, Iran is already facing U.S. sanctions regarding crude oil exports after the Trump administration withdrew from Iran Nuclear Agreement of 2015.
Gold Price Skyrocketed
On Jun 24, the gold futures for August delivery gained more than 1% to close at 1,418.20 per ounce after touching an intraday high of 1,424.90 per ounce, its highest since Aug 28, 2013. Month to date, gold price is up more than 6.5% after gaining 1.6% in May. If this trend continues, it will be the best back-to-back monthly gain for the yellow metal since it gained more than 8% in the January-February 2017 period. Buying pressure on gold is likely to remain firm as investors will focus on precious metals as a store of wealth and hedge against market turmoil.
Consequently, shares of gold stock like AngloGold Ashanti Ltd. AU and Franco-Nevada Corp. FNV climbed 4% and 3.1%, respectively. AngloGold Ashanti sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research