ASX set to rise, Google’s parent weighs on Wall Street; Nissan-Honda merger in jeopardy

Goldman Sachs economist David Mericle says a further extension may happen, but he sees the tariff risk for both countries likely remaining until the end of a review of the United States’ existing trade agreement with the two countries, which could be in the middle of next year.

In the meantime, Trump has pressed ahead with tariffs on Chinese goods, and Mericle expects tariffs to hit autos from the European Union, among other potential moves. That could drive a one-time boost to inflation, which could leave a widely followed measure of underlying inflation trends at 2.6 per cent in December, above the Federal Reserve’s target of 2 per cent.

One of the fears hurting Wall Street is that the upward pressure on inflation could keep the Fed from cutting interest rates this year, after it began doing so in September in order to relax pressure on the economy and give the job market some help.

Yields in the bond market fell Wednesday after a report said growth for mining, finance and other US services businesses was weaker last month than economists expected. The survey by the Institute for Supply Management found many businesses citing poor weather conditions.

Businesses also “mentioned preparations or concerns related to potential US government tariff actions; however, there was little mention of current business impacts as a result,” according to Steve Miller, chair of the ISM’s Services Business Survey Committee.

The yield on the 10-year Treasury yield fell to 4.42 per cent from 4.52 per cent late on Tuesday.

On Wall Street, the Walt Disney Company swung from an early gain to a loss of 2.4 per cent after delivering a better profit for the latest quarter than analysts expected, thanks in part to a strong performance for its Moana 2 movie.

All told, the S&P 500 rose 23.60 points to 6,061.48. The Dow Jones Industrial Average gained 317.24 to 44,873.28, and the Nasdaq composite added 38.31 to 19,692.33.

In stock markets abroad, European indexes were mixed amid relatively modest movements. In Asia, Hong Kong’s Hang Seng fell 0.9 per cent, while South Korea’s Kospi gained 1.1 per cent.

Japan’s Nikkei 225 edged up 0.1 per cent as Honda Motor Co. jumped after Japanese media reports said its talks to set up a joint holding company with rival Nissan Motor Corp. were unravelling. Nissan’s stock fell 4.9 per cent.

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