Monday June 25th

25-06-2018

Dow set to drop nearly 150 points as trade tumult continues to rattle investors

U.S. stock index futures fell sharply ahead of Monday’s open, following negative trade seen in markets overseas. Around 8:22 a.m. ET, Dow Jones Industrial Average futures fell 167 points, indicating a negative open of 144.89 points. Nasdaq 100 and the S&P 500 futures indicated a downbeat start to their respective trading session. As another trading week kicks off, market-watchers are likely to be digesting any new information surrounding global trade tensions, amid fresh economic data. Last week, President Donald Trump took to Twitter to threaten another set of tariffs, this time on the European Union. On Friday, the U.S. incumbent warned of a 20 percent tariff on all car imports from the EU, stating that if the bloc refused to remove duties on U.S. cars, then Washington would have no choice but to act on these levies. Consequently, European markets were under pressure Monday. The Stoxx 600 index, which tracks a broad swath of European equities, fell 1.2 percent, while the German Dax dropped 1.2 percent. Trump added over the weekend that “all countries that have placed artificial trade barriers and tariffs on goods going into their country” should get rid of them, or face reciprocation from the U.S. Coming up Monday, at 10 a.m. ET, new home sales data is scheduled to be published, followed by the Dallas Fed's Texas manufacturing outlook survey at 10:30 a.m. ET. Asia markets were mostly down on Monday afternoon as investors attempted to shake off jitters about trade tensions between the United States and China. Japan's Nikkei 225 declined 178.68 points, or 0.79 percent, to 22,338.15 while the Topix index fell 16.56 points, or 0.95 percent, to 1,728.27. Across the Korean Strait, the Kospi finished near flat at 2,357.88. Hong Kong's Hang Seng index fell 1.33 percent in late-afternoon trade. Chinese mainland markets erased early gains to close down. The Shanghai composite fell 29.99 points, or 1.04 percent, to 2,859.76 while the Shenzhen composite lost 10.08 points, or 0.63 percent, to 1,587.3. Brent crude oil fell by more than 1 percent on Monday as investors prepared for an extra 1 million barrels per day (bpd) in output to hit the markets after OPEC and its partners agreed to raise production. Despite the increase, which is intended to stop the gap between global supply and demand from becoming too wide, analysts said global oil markets would likely remain relatively tight this year. Brent crude futures fell $1.06, or 1.4 percent, to $74.49 a barrel by 8:35 a.m. ET (1235 GMT), while U.S. light crude was up 50 cents at $69.08 a barrel, supported in part by a Canadian supply outage. Prices initially jumped after an OPEC deal to increase output was announced late last week, as it was not seen boosting supply by as much as some had expected. Gold steadied off last week's six-month low on Monday as concerns over a global trade war ratcheted higher after a report said the United States plans to bar Chinese companies from investing in its technology firms. A stronger dollar kept the pressure on prices, however. The U.S. Treasury Department is crafting rules that would block firms with at least 25 percent Chinese ownership from buying U.S. companies involved in "industrially significant technology," the Wall Street Journal reported on Sunday. Spot gold was steady at $1,268.81 an ounce, close to a six-month low touched on Thursday of $1,260.84. U.S. gold futures for August delivery were flat at $1,270.80 per ounce.