Wednesday June 27th

27-06-2018

Stock futures go positive as Trump tech-related crackdown on China is less strict than feared

U.S. stock index futures pointed to slight gains at the open on Wednesday, slashing steep losses from earlier in the day, as a crackdown on Chinese tech investments by the Trump administration was less restrictive than expected. Dow Jones Industrial Average futures traded 20 points higher, and indicated a gain of 45.89 points at the open. At one point, Dow futures pointed to a triple-digit loss at the open. Nasdaq 100 and the S&P 500 also futures pointed to slight gains at the open. The government will rely on the newly strengthened Committee on Foreign Investment in the United States to deal with concerns about foreign purchase of sensitive domestic technologies, a senior administration official said Wednesday. Reports earlier in the week suggested that the White House would more actively restrict investment in technology firms by Chinese companies, but instead it appears it will rely on CIFUS. Treasury Secretary Steven Mnuchin told CNBC's "Squawk Box" that the department can block U.S.-China ventures if there is technology transferred, however. "Clearly, this was not as onerous as people thought," said Marc Chaikin, CEO of Chaikin Analytics. "I think investors have to stay the course and ignore the headlines." "We've got a mercurial president that says one thing but could very quickly change his mind or do something different," Chaikin said. Markets around the world have been on a roller-coaster ride in recent weeks as fears around trade tensions between the U.S. and other major economies escalate. Not only is the U.S. in a tit-for-tat war of words with China on tariffs, but now the European Union is involved. Last week, President Donald Trump threatened a 20 percent tariff on all car imports from the EU. He added that if the EU chose not to remove its duties on American vehicles, then the U.S. would have no choice but to act on those levies. Trade tensions have since ratcheted up another notch this week following reports that Washington intended on blocking some Chinese businesses from investing in U.S. technology. However, Mnuchin called the reports "fake news." Asian stocks closed lower on Wednesday, led by the drop in China markets as investors digested the yuan's extended move lower amid trade worries as oil prices rose. The Nikkei 225 slipped 0.31 percent, or 70.23 points, to close at 22,271.77, with banks and automakers in negative territory. In Seoul, the Kospi closed lower by 0.38 percent at 2,342.03 as gains in blue chip technology stocks failed to buoy the broader index amid declines in other sectors. Elsewhere, markets in China slumped. The Shanghai composite fell 1.11 percent to close at 2,812.87 and the smaller Shenzhen composite lost 1.29 percent. The benchmark Shanghai index began the day already in bear market territory, referring to a drop of at least 20 percent from recent highs. The blue-chip CSI 300, meanwhile, tumbled 2.05 percent on the day. Hong Kong's Hang Seng Index gave up slight gains seen earlier in the day to decline 1.04 percent by 3:02 p.m. Oil prices rose on Wednesday on a supply disruption in Canada, falling U.S. crude stocks, uncertainty over Libyan exports and after U.S. officials told importers to stop buying Iranian crude from November. Brent crude was up 30 cents a barrel at $76.61 by 0800 GMT. U.S. light crude was 25 cents higher at $70.78. A supply outage at Syncrude in Canada has locked in 350,000 barrels per day (bpd) of crude, with repairs expected to last at least through July. Gold prices slipped to a new six-month low on Wednesday as the dollar strengthened, making bullion more expensive for buyers using other currencies. The move takes gold's losses this month to more than 3 percent - the biggest monthly loss since September - driven by a dollar rally, a large decline in gold held by exchange traded funds and a sharp fall in speculative bets on higher prices. Spot gold was down 0.25 percent at $1,255.52 an ounce after hitting its lowest since mid-December at $1,253. U.S. gold futures for August delivery were 0.21 percent lower at $1,257.30.