Inflation data, US-China trade talks to set market direction this week

US STOCKS surged last week and the Dow Jones Industrial Average registered its biggest weekly gain of the year as investors focused on the interest-rate silver lining among dark economic clouds.

The gains could continue this week, as long as there are no unpleasant surprises from US trade negotiations with China or from inflation data.

Stocks slid and the Nasdaq Composite entered correction territory - more than 10 per cent from its recent peak - last Monday after US President Donald Trump said he would impose new tariffs on Mexican imports. He later dropped the threat in return for promises of a military clampdown on immigrants.

Meanwhile, the casualties of the existing trade war continue to pile up. The Commerce Department reported that April factory orders fell even as the World Bank warned that the trade …