Monday March 5th

5-03-2018

US stocks set for a mixed open as trade war fears rumble on

U.S. stock index futures fluctuated ahead of Monday's open, pulling back from the mixed to positive finish seen on Wall Street in the previous session. At around 5:55 a.m. ET, Dow futures were off 11 points, indicating a drop of 8.06 points at the open. The Nasdaq and S&P 500 futures meantime pointed to a flat to positive open for their respective markets. The negative sentiment seen in U.S. futures is likely to be linked somewhat to the recent tariff announcements made by the U.S. president. Last week, markets went on a roller-coaster ride during the last two trading days after Donald Trump announced that the U.S. would be imposing new tariffs on aluminum and steel, as early as this coming week. The news was met with criticism from a number of leaders, and investors have remained on edge, as Trump's announcement sparks fears of a trade war. On Saturday, Trump tweeted that if the EU wanted to further increase "their already massive tariffs and barriers on U.S companies," then the U.S. would apply a tax on European automakers. Many European car firms saw their shares open sharply lower on Monday morning. Switching focus to Monday's session, a services purchasing managers' index is due out at 9:45 a.m. ET, followed by the non-manufacturing ISM report on business, due out at 10 a.m. ET. No major earnings are due to be released. On the U.S. central banking front, Fed Governor Randal Quarles is expected to be in Washington, D.C., where he is set to deliver remarks at the Institute of International Bankers Annual Washington Conference. Markets remain on edge overseas, with Asia closing lower as Chinese leaders headed into an annual parliament meeting. While in Europe, politics dominated following news that early projections in Italy indicated that no party was emerging with a clear majority in the election that took place Sunday. Japan's Nikkei 225 fell 0.66 percent to close at 21,042.09, marking its fourth straight session of losses. Monday's declines also saw the Nikkei touch its lowest levels since October. The Topix index ended down 0.79 percent. Across the Korean Strait, the Kospi closed lower by 1.13 percent. Chinese mainland markets reversed early losses to close slightly higher, with the Shanghai composite finishing up 0.09 percent. The Shenzhencomposite wavered between gains and losses to close higher by 0.47 percent. In Hong Kong, the Hang Seng index declined 1.42 percent by 3:00 p.m. HK/SIN, with large cap financials leading losses an hour before the market close. Oil prices edged higher towards $65 per barrel on Monday but predictions of a major spike in U.S. oil output in the next five years capped the market's gains. International benchmark Brent crude was up 36 cents, or 0.6 percent, at $64.73 a barrel by 1028 GMT. The contract was well below this year's highs of over $71 per barrel that it hit in January. U.S. West Texas Intermediate (WTI) crude rose 42 cents, or 0.7 percent, to $61.67 per barrel. Gold touched a near one-week high on Monday as investors opted for safe-haven assets on political uncertainty in Italy and fears of a potential escalation of a simmering global trade war. Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty, benefiting along with other haven assets such as the Japanese yen and U.S. Treasuries while stocks tend to trend lower. Spot gold was up 0.3 percent to $1,325.91 per ounce by 1105 GMT after touching its highest since Feb. 27 at $1,327.86. U.S. gold futures for April delivery rose 0.3 percent to $1,327.20 per ounce.