Monday May 20th

20-05-2019

Dow futures sink more than 150 points as investors focus on Huawei fallout

U.S. stock index futures fell on Monday as concerns about an intensifying fallout from a U.S. crackdown on Huawei weighed on market sentiment. At around 8:34 a.m. ET, Dow Jones Industrial Average futures indicated were down 181 points, indicating a drop of 163 points at the open. S&P 500 and Nasdaq 100 futures traded lower as well. Alphabet’s Google has suspended business with Huawei that involves transferring hardware, software and other technical services. The U.S. search giant’s decision follows President Donald Trump’s administration adding Huawei to a list that required U.S. companies get a license to do business with the Chinese company. Bloomberg News also reported that companies like Intel, Qualcomm and Broadcom will not supply Huawei until further notice. Chipmaker stocks fell broadly in the premarket. Nvidia, Applied Materials, Advanced Micro Devices and Lam Research all traded down more than 2%. Shares of Micron Technology fell 3.6%. Apple added to the market’s decline, sliding more than 2%. Boeing shares declined 0.9%. The moves by the U.S. government and tech companies come as China and the U.S. try to strike a deal that would end the countries’ ongoing trade war. The U.S. hiked tariffs on $200 billion worth of Chinese goods earlier this month, and China retaliated by raising levies on $60 billion worth of U.S. imports. CNBC reported on Friday that U.S.-China trade talks have stalled. Sources told CNBC’s Kayla Tausche that scheduling discussions had not happened as the U.S. increases pressure on Chinese telecom companies. Meanwhile, the South China Morning Post said that China was in no rush to continue trade talks.  Trade fears have hit stocks hard this month. The S&P 500 was down 2.9% for May through Friday’s close while the Dow and Nasdaq had both lost more than 3%. However, a U.S. decision to remove tariffs on Canadian and Mexican steel and aluminum provided some relief for investors. Canada’s Foreign Minister Chrystia Freeland said Ottawa would move quickly to ratify the new North American trade pact. Stocks in Asia were mixed on Monday amid a series of geopolitical developments across the region. The Nikkei 225 in Japan added 0.24% to close at 21,301.73. The Topix also edged up fractionally to finish its trading day at 1,554.92. In South Korea, the Kospi closed flat at 2,055.71. In mainland China, however, shares ended the trading day lower. The Shanghai composite slipped 0.41% to 2,870.60 and the Shenzhen component shed 0.93% to 8,916.11. The Shenzhen composite also fell 0.75% to 1,521.72. Hong Kong’s Hang Seng index slipped more than 0.5%, as of its final hour of trading. Oil steadied on Monday after hitting multi-week highs, as OPEC indicated it was likely to maintain production cuts that have helped boost crude prices this year. Escalating Middle East tensions provided further support. Brent crude oil was up 3 cents at $72.24 a barrel around 8:40 a.m. ET (1240 GMT). The international benchmark for oil prices earlier touched $73.40, the highest since April 26. U.S. West Texas Intermediate crude futures were down 7 cents at $62.69 a barrel. WTI reached $63.81 earlier, the highest since May 1. Gold prices fell to a more than two-week trough on Monday as strong U.S. economic data underpinned the dollar, boosting its safe-haven status over gold amid political and trade tensions. Spot gold was broadly unchanged at $1,276.83 per ounce as of 0731 GMT, having fallen to $1,274.39, its lowest since May 3 earlier, in the session. U.S. gold futures edged 0.1% higher at $1,276.50 an ounce.