Wall Street rebounds as investors cast off trade fears

WEB_PHOTO_WALLST_260517

Wall Street stocks opened just barely into positive territory on May 24, 2017, following a four-day winning streak, while investors awaited the minutes from the US central bank's last meeting. Photo: Bryan R. Smith / AFP

Wall Street stocks opened just barely into positive territory on May 24, 2017, following a four-day winning streak, while investors awaited the minutes from the US central bank's last meeting. Photo: Bryan R. Smith / AFP

WEB_PHOTO_WALLST_260517

Wall Street stocks opened just barely into positive territory on May 24, 2017, following a four-day winning streak, while investors awaited the minutes from the US central bank's last meeting. Photo: Bryan R. Smith / AFP

Wall Street stocks opened just barely into positive territory on May 24, 2017, following a four-day winning streak, while investors awaited the minutes from the US central bank's last meeting. Photo: Bryan R. Smith / AFP

NEW YORK - Wall Street regained its cheer on Monday, casting off fears of trade Armageddon as major US stock indices forged higher.

The turnabout among American investors bought a bullish close to what had started out as a dour day on world markets

President Donald Trump issued fresh early morning Twitter blitz on trade and stocks in Milan fell after rising of the far right in Italy&39;s elections.

German stocks, by contrast, rose amid relief sparked by an agreement for another grand coalition led by Chancellor Angela Merkel.

In New York, investors concluded Trump&39;s threats to impose sweeping steel and aluminium tariffs with no exemptions for key allies like Canada and Mexico could be a  bargaining tactic to get his way in talks to renegotiate the North American Free Trade Agreement.

"Most investors do not believe the president will go through with such a strict and onerous plan," Sam Stovall of CFRA told AFP.

The Dow Jones Industrial Average broke a four-day winning streak to add 1.3 percent while the S&P 500 and Nasdaq each gained one percent or more. Fears of a trade war on Thursday and Friday had sent markets tumbling.

Mixed political outcome in Europe

Meanwhile, in Italy, the anti-establishment Five Star Movement and the far-right euro-sceptic League party were the big winners of the Italian election, which laid bare widespread anger over immigration and frustration with mainstream politics.

Neither of the anti-establishment parties is "an attractive option for markets or the euro", said Rebecca O&39;Keeffe of Interactive Investor. 

Germany, on the other hand, struck a blow for normalcy, as coalition talks finally concluded and Merkel pledged to work with the "Social Democrats" for the good of Germany.

Foreign exchange investors decided that encouraging news from Germany outweighed the uncertainty over Italy, and the euro rose against the dollar, which also was weakened by Trump&39;s trade threats.

Earlier on Monday, Asian markets fell again as the fallout from Trump&39;s proposed steel and aluminium tariffs fanned fears of a global trade conflict.

Shares in Tokyo and Hong Kong sank while Shanghai posted a modest 0.1 percent gain.