MARKET SNAPSHOT: Stock Futures Lower As U.S. Reiterates Threat To Raise Tariffs On China
May 07 2019 - 04:26AM
Dow Jones News
By Barbara Kollmeyer, MarketWatch
Higher China tariffs will kick in by Friday, vow U.S.
officials
Wall Street was bracing for more losses on Tuesday as stock
futures fell on simmering trade tensions, with U.S. officials
confirming that China tariffs would be raised by the end of the
week.
How are benchmark indexes faring?
Dow Jones Industrial Average futures fell 126 points, or 0.5%,
to 26,277, while S&P 500 futures dropped 14.65 points, or 0.5%,
to 2,917.50. Nasdaq-100 futures fell 44 points, or 0.6%, to
7,760.
U.S. stocks finished lower on Monday
(http://www.marketwatch.com/story/us-stock-futures-sink-as-threat-of-full-blown-trade-war-re-emerges-2019-05-06),
but recouped deeper losses. The Dow Jones Industrial Average slid
66.47 points, or 0.3%, to 26,438.48 after being down almost 500
points earlier in the session. The S&P 500 index declined 0.5%
to 2,932.47, while the Nasdaq Composite Index retreated 0.5%, to
8,123.29 after touching a Monday low near the open at 7,981.85.
What's driving markets?
U.S. Trade Representative Robert Lighthizer said Monday that the
Trump administration will make good on a threat to lift tariffs
(http://www.marketwatch.com/story/lighthizer-accuses-china-of-reneging-on-promises-says-tariffs-will-rise-friday-2019-05-06)
on $200 billion in Chinese goods early Friday. That threat had been
laid out on Sunday by President Donald Trump, catching investors
off guard and triggering risk-off activity across global
markets.
Read:With Trump threatening to tighten the trade screws, here's
a look at what tariffs have done so far
(http://www.marketwatch.com/story/with-trump-threatening-to-tighten-the-trade-screws-heres-a-look-at-what-tariffs-have-done-so-far-2019-05-06)
Further details behind those increased tensions were revealed by
Treasury Secretary Steven Mnuchin in a briefing with Lighthizer. He
told reporters that the U.S. administration was made aware over the
weekend that China was trying to back away from "some of the
language" that had been hammered out in prior talks.
U.S. officials said that tariffs on those Chinese goods will
rise from 10% to 20% at 12:01 a.m. Eastern time Friday, and markets
will likely be monitoring China for further reaction. Thus far,
Chinese delegates are expected to arrive for planned trade talks on
Thursday, one day later than expected, though it remains unclear
exactly who will be representing Beijing.
Chinese stocks took the latest developments in stride, while
haven assets appeared to get less of a bid from investors who were
adjusting to the latest developments.
What are analysts saying?
"The overriding concern here is that Trump has single-handedly
halted the recent recovery in risk appetite by potentially
derailing trade talks," said Jasper Lawler, head of research at
London Capital Group, in a note to traders.
Lawler said traders were "placated" by news that Chinese
delegates would still arrive in Washington this week for talks, but
skeptical the two sides can work out the latest fracture by the
Friday deadline. "This means markets probably need to see the
Friday deadline for raising U.S. tariffs on Chinese goods pushed
back to avoid another selloff," he said.
How are other markets trading?
In Asia
(http://www.marketwatch.com/story/asian-markets-mixed-as-traders-weigh-us-china-trade-dispute-2019-05-06),
the Shanghai Composite Index reversed a small lose to close up
0.6%, while the Nikkei 225 , back from an extended holiday break,
fell 1.5%. European stocks were mostly lower, with the FTSE 100
index down 0.6% as investors returned from a holiday and played
catch up to Monday's losses on the continent.
Gold was down slightly, while the U.S. Dollar Index was flat,
and crude oil dropped.
(END) Dow Jones Newswires
May 07, 2019 05:11 ET (09:11 GMT)
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