➤ U.S. temporarily eases Huawei restrictions, providing a breather
➤ Lira under pressure as Turkish central bank resumes 1-week repo auctions
➤ U.K.'s Theresa May due to disclose new Brexit proposal
➤ Australian dollar falls on potential rate cut in June
U.S. stocks rebounded and European equities gained May 21, as the Trump administration temporarily eased the restrictions on Huawei Technologies Co. Ltd.
The U.S. Commerce Department issued a temporary license that will allow American companies to engage in transactions with Huawei and its affiliates under certain conditions for the next three months. The U.S. recently blacklisted Huawei due to perceived threats to national security.
China's envoy to the EU, Zhang Ming, warned the U.S. of "a necessary response" to the Huawei blacklisting, saying Beijing will not watch the "legitimate rights and interests" of Chinese companies being undermined, Bloomberg News reported. Separately, Foreign Ministry Spokesman Lu Kang reportedly said China remains an attractive location for foreign investment, despite U.S. President Donald Trump's claims that companies are moving their production out of China to other Asian countries due to tariffs.
U.S. markets opened higher, with S&P 500 trading 0.6% higher and Nasdaq 100 1% higher around 9:30 a.m. ET, having closed down yesterday.
Germany's DAX index climbed nearly 1%, France's CAC 40 was up 0.6% and the FTSE 100 rose 0.5%.
European semiconductor companies gained amid the Huawei breather, with Infineon Technologies AG adding 1%, STMicroelectronics NV on NYSE rising 4.1%, ASML Holding NV gaining more than 2% and NXP Semiconductors NV on NASDAQ jumping 1.6%.
Asia had a mixed trading session, as the Shanghai SE Composite added 1.2%, with the technology sector gaining almost 1.7%. Japan's Nikkei 225 index fell 0.1% and Hong Kong's Hang Seng index closed 0.5% lower.
In currencies, the dollar spot index, which measures the U.S. currency against a basket of peers, gained more than 0.1%.
Almost all risks markets faced at the start of the year, such as weak global data, Brexit and trade tensions, remain or have gotten worse, Athanasios Vamvakidis of Bank of America Merrill Lynch said in a report. The dollar is expected to weaken in the second half on "waning fiscal stimulus in the U.S. and better data abroad," as improving global economic conditions usually weaken the dollar, particularly as it is overvalued, Vamvakidis added.
The Australian dollar fell 0.5% against its U.S. counterpart after Reserve Bank of Australia Governor Philip Lowe said the central bank will consider cutting interest rates at its next monetary policy meeting in June.
Sterling was little changed around 9:30 a.m. ET against the U.S. dollar, having depreciated 0.2% earlier in the day, as U.K. Prime Minister Theresa May was due to set out a new proposal to win lawmakers' approval.
The Turkish lira depreciated more than 0.6% as the Türkiye Cumhuriyet Merkez Bankası AS reportedly resumed its one-week repo auctions, effectively bringing back the borrowing rate to 24% from 25.5%.
The euro was down 0.1% and Japanese yen dropped 0.5% versus the dollar.
In commodities, Brent crude oil reversed earlier gains to trade around $72 per barrel on the ICE Futures Exchange, while gold dropped 0.5%.
Ten-year Treasury yields were broadly stable.
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The day ahead:
10 a.m. ET — Eurozone consumer confidence flash (Econoday consensus: -7.6)
10 a.m. ET — U.S. existing home sales (Econoday consensus: 5.370 million)
10:45 a.m. ET — U.S. Fed's Charles Evans speaks
12 p.m. ET — U.S. Fed's Eric Rosengren speaks