Tuesday May 7th

7-05-2019

Dow futures fall for a second day after US says new tariffs coming on Friday

U.S. stock index futures were lower on Tuesday after a top U.S. trade official said more tariffs on Chinese goods are coming. At around 7:50 a.m. ET, Dow Jones Industrial Average futures fell 188 points, indicating a drop of 191 points at the open. Futures on the S&P 500 and Nasdaq 100 were also lower. Shares of trade bellwethers Caterpillar and Boeing fell 0.9% and 1.4%, respectively. The move down comes after U.S. Trade Representative Robert Lighthizer told reporters that the U.S. will increase levies on Chinese imports on Friday. Lighthizer made his remarks after President Donald Trump tweeted he would raise current tariffs 10% on $200 billion of Chinese goods to 25% on Friday. He also threatened to impose an extra 25% levies on another $325 billion of Chinese goods “shortly.” Trump’s tweets initially sent the market reeling on Monday. The Dow fell as much as 471 points while the Nasdaq dropped 2% at one point. However, equities rebounded to close well off their lows as traders bet that a resolution would still be reached. “I remain hopeful that a deal comes and we won’t see new tariffs on Friday,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “But its clear the level of mistrust between the two sides will last for years and some of the tariffs will remain as part of the enforcement tools.” Chinese Vice Premier Liu He is expected to join a delegation in the United States this week, raising hopes of a trade agreement despite the latest round of duties. However, he will only attend the negotiations on Thursday and Friday. He was originally scheduled to attend negotiations Wednesday through Saturday. “The Trump administration seems to have concluded that it is time to get it done. In other words, it’s either deal or no deal,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. But “I expect that the US and China will settle their differences on trade issues sooner rather than later.” On the data front, there is job openings and labor turnover survey (JOLTs) due at 10 a.m. ET; and consumer credit numbers due at 3 p.m. ET. Stocks in Asia were mixed on Tuesday amid renewed tensions between the U.S. and China after Washington said tariffs on Chinese goods will rise on Friday. The Chinese markets, which plunged more than 5% on Monday, attempted to stage a recovery during Tuesday’s session. The Shanghai composite rose 0.69% to close at about 2,926.39 and the Shenzhen component added 1.63% to finish its trading day at 9,089.46. The Shenzhen composite advanced 1.617% to close at approximately 1,540.31. Meanwhile, Hong Kong’s Hang Seng index also added more than 0.3%, as of its final hour of trading. The Nikkei 225 in Japan, which returned to the first day of trade following an extended holiday period, slipped 1.51% to close at 21,923.72. The Topix index also declined 1.12% to finish its trading day at 1,599.84. Over in South Korea, the Kospi fell 0.88% to close at 2,176.99. Oil prices fell on Tuesday as renewed doubts over U.S.-China trade talks stoked jitters over global growth, but losses were tempered by a U.S. military deployment to the Gulf to deter Iran. Brent crude oil futures were at $70.84 per barrel at 0850 GMT, 40 cents or 0.56 percent below their last close. U.S. West Texas Intermediate crude futures were at $61.97 per barrel, down 28 cents or 0.45 percent. Gold prices edged higher on Tuesday as investors moved away from riskier assets after U.S. President Donald Trump threatened to raise tariffs on Chinese imports, heightening trade tensions and lifting demand for the safe-haven metal. Spot gold was up 0.1 percent at $1,281.04 an ounce. U.S. gold futures fell 0.1 percent to $1,282.10.