Wednesday May 8th

8-05-2019

Stock futures cut losses after Trump tweets that China is coming this week to make a deal

U.S. stock index futures pared their losses after President Trump said China is coming this week to make a deal in a tweet. Dow Jones Industrial Average futures fell 55 points, paring earlier losses and indicating a lower open of about 13 points. Futures on the S&P 500 were down about 0.2%. Nasdaq was also set to open lower. Trump’s comments about being “happy” so far with current tariffs tempered a bit of the enthusiasm. Dow futures were down more than 100 points Wednesday morning on fears the U.S. and China would be unable to resolve a dispute over a proposed trade agreement before new tariffs threatened by Trump are implemented Friday. Chinese trade officials backtracked on key aspects of a trade deal draft, undercutting hopes that the Chinese delegation led by Vice Premier Liu He this week could salvage the deal, according to a Reuters report. Shares of Caterpillar and Ford Motor fell in premarket trading, along with chip stocks including Nvidia and Micron Technology, on the trade war fears. “Stocks are betting on a rebound in the global economy in coming quarters ... If we get higher tariffs this week and talks break down between the U.S. and China, you can kiss that hope for [a] global economic rebound goodbye,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, in an email. President Trump said in a Twitter post Sunday the U.S. would hike tariffs on Chinese goods as soon as Friday, which sparked a global sell-off. The Dow plunged more than 470 points on Tuesday, its biggest decline since January 3, as traders realized Trump’s threat was not just a negotiation tactic after U.S. Trade Representative Robert Lighthizer confirmed the higher levies are coming this week. The Dow has lost nearly 540 points this week amid the trade dispute, while the S&P 500 and Nasdaq are down more than 2% after both hitting all-time highs last week. Data released Wednesday morning in China suggested that its trade surplus in April stood at $13.84 billion, well below expectations. However, its trade surplus with the U.S. rose to $21.01 billion in April from $20.5 billion in March. Investors are also monitoring corporate earnings. Honda Motor, Toyota Motors, The New York Times, and Wendy’s will report their latest results before the bell. Disney and Fox will report after the closing bell. So far, 88% of the S&P 500 companies have reported their first-quarter earnings. Earnings are beating by 6.7%, with 73% of companies exceeding their bottom-line estimates, according to Credit Suisse. Asia stocks declined Wednesday as investors digested ongoing developments in the U.S.-China trade negotiations, which sent stateside shares tumbling overnight. Mainland Chinese shares were lower on the day, with the Shanghai compositedown 1.12% to about 2,893.76. The Shenzhen component slid 0.96% to 9,002.53 while the Shenzhen composite declined 0.649% to approximately 1,530.31. The Hang Seng index in Hong Kong declined around 1.2%, as of its final hour of trading. Elsewhere in Asia, Japan’s Nikkei 225 dropped 1.46% to close at 21,602.59. The Topix index also fell 1.72% to 1,572.33. In South Korea, the Kospi finished its trading day lower by 0.41% at 2,168.01. Oil prices steadied on Wednesday as concerns about a deepening trade spat between the United States and China offset record Chinese imports and tighter global supplies. Brent crude oil futures were down 9 cents at $69.79 per barrel around 8:20 a.m. ET (1220 GMT) U.S. West Texas Intermediate crude futures rose 15 cents to $61.55 per barrel. Gold prices rose to their highest in more than a week on Wednesday as renewed worries over U.S.-China trade dispute and its potential impact on global growth dented risk sentiment, stoking investors towards safe-haven assets. Spot gold was up 0.2 percent at $1,287 per ounce, as of 0715 GMT, after hitting their highest since April 26 at $1,287.94. U.S. gold futures edged 0.2 percent higher to $1,288.30 an ounce.