Monday July 2nd

2-07-2018

Dow set to start the third quarter with 100-point loss on concerns about Trump's trade conflicts

U.S. stock index futures slumped on Monday, the first trading day of the third quarter, as markets across the globe pulled back on rising trade tensions. Dow Jones Industrial Average futures tumbled 140 points, indicating a decline of 129.41 points at the open. Nasdaq 100 and S&P 500 futures also indicated sharp losses at the start to their respective trading sessions. Boeing, Caterpillar and General Motors all fell at least 0.7 percent in the premarket. These companies do lots of business overseas and are sensitive to trade tensions. Fears surrounding a potential trade war between the U.S. and other major economies continue to plague market sentiment around the world. The Trump administration is reportedly looking into drafting a bill that would allow the White House to unilaterally increase trade tariffs without congressional consent, according to an Axios report published Sunday. If legislation moves ahead, it could mean that the U.S. would be acting outside of the World Trade Organization’s policies and rules. Elsewhere, a report by the Financial Times suggested that the U.S. could receive a new round of tariffs worth as much as $300 billion, if Washington moves ahead with levies on automakers in the European Union. Monday also marked the first trading day of the second half of the year. Equities posted mixed performances in the first half, with Nasdaq composite and S&P 500 rising 8.8 percent and 1.7 percent, respectively, while the Dow declined 1.8 percent. The small-caps Russell 2000, meanwhile, rose 7 percent to start off 2018. Data scheduled for publication includes the manufacturing purchasing managers’ index (PMI) at 9:45 a.m. ET, followed by Manufacturing ISM report on business and construction spending at 10 a.m. ET. Herman Miller is scheduled to publish its earnings after the bell. Oil prices slipped into negative territory, on the back of an increase in supply from Russia and Saudi Arabia. On Saturday, President Donald Trump tweeted that he’d asked King Salman of Saudi Arabia for the country to pump more oil “maybe up to 2,000,000 barrels, to make up the difference" and that he had agreed. The White House, however, have since walked back on the president’s comments. Major Asian markets closed sharply lower on Monday, the first trading day of the second half of the year, as heavy losses were recorded in China ahead of a looming deadline when tariffs from both Washington and Beijing are expected to take effect. In Tokyo, the Nikkei 225 sank in afternoon trade, closing down 2.21 percent, or 492.58 points, at 21,811.93. Over in Seoul, losses on the Kospi steepened through the day, with the index falling 2.35 percent to end at 2,271.54. Elsewhere, the Shanghai composite fell 2.52 percent to finish at 2,775.77, failing to sustain the slight rebound seen in the previous session, while the smaller Shenzhen composite lost 1.58 percent for the day. Gold prices edged lower on Monday as the dollar firmed after last week's U.S. inflation data supported the Federal Reserve's outlook for future interest rate increases. Spot gold was 0.3 percent lower at $1,248.98 an ounce as of 0644 GMT. U.S. gold futures for August delivery were down 0.3 percent at $1,250.20 an ounce.