China announced Monday that its trade surplus surged 78% to $41.7 billion in May. Its exports grew 1.1% in May from a year earlier, trouncing expectations of a 3.8% decline by analysts polled by FactSet. The country's imports slid 8.5% from a year earlier, a far softer performance than predicted by analysts. Investors had expected both indicators to shrink given softening external conditions.
This solidified gains in Asia. Stocks rose early Monday on news that U.S. President Donald Trump had suspended plans to impose tariffs on Mexico after the two countries arrived at an agreement on immigration.
The agreement with Mexico "appears to be a lower hanging fruit for the Trump administration," Jingyi Pan of IG said in a commentary. "The U.S.-China trade conflict meanwhile reckoned to remain an ongoing concern that looks have been caught in stalemate," she added.
Over the weekend, financial leaders of the Group of 20 major economies met in Fukuoka, Japan, and pledged to protect global growth. They said in a joint communique that risks from trade and geopolitical tensions were "intensifying."
The communique didn't single out the tariffs battle between the U.S. and China, but leaders signaled separately that it was the No. 1 concern. U.S. Treasury Secretary Steven Mnuchin met China's central bank Gov. Yi Gang on the sidelines of the same gathering on Sunday. The two countries have concluded 11 rounds of trade talks with no agreement.
Mnuchin said on Twitter that the meeting was constructive and they had "candid discussion on trade issues." He did not give further details. On Friday, U.S. stocks capped off their best week since late November and reversed most of their losses in May. Traders took a lackluster jobs report as good news, as it was seen as increasing the odds of the Federal Reserve cutting interest rates in the coming months.
The benchmark S&P 500 index rebounded 1.1% to 2,873.34 and the Dow Jones Industrial Average gained 1% to 25,983.94. The Nasdaq composite climbed 1.7% to 7,742.10. The Russell 2000 index of smaller company stocks rose 0.7% to 1,514.39.
ENERGY: Benchmark U.S. crude gained 29 cents to $54.28 per barrel. The contract advanced $1.40 to $53.99 per barrel on Friday. Brent crude oil, the international standard, also added 29 cents to $63.58 a barrel. It added $1.62 to $63.29 per barrel in the previous session.
CURRENCIES: The dollar rose to 108.63 Japanese yen from 108.17 yen late Friday. The euro weakened to $1.1312 from $1.1335.