Thursday May 24th

24-05-2018

Futures point to a lower open amid US trade tensions

U.S. stock index futures futures pointed to a lower open Thursday morning after news that the Trump administration is considering new tariffs on foreign automobiles. The surprise announcement from the White House comes at a tenuous time for trade relations between the United States and its trading partners, including the European Union and China. At around 8:30 a.m. ET, Dow futures slipped 46 points, indicating a lower implied open of roughly 61 points. The Nasdaq and S&P 500 futures pointed to a lower start to the session for their respective markets. Uncertainty surrounding international trade returned to Wall Street Thursday after the Commerce Department said Wednesday night that it started an investigation into whether automobile imports "threaten to impair the national security" of the United States. "There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry," Commerce Secretary Wilbur Ross said in a statement. The Commerce Department said the investigation "will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies." The possibility of additional import taxes isn't likely to help already stressed trade negotiations between the U.S. and countries like Japan, Germany and South Korea, all major participants in the international automobile market. Japan's Nikkei 225 fell 1.1 percent while the Stoxx Europe 600 traded slightly lower, with shares of BMW and Volkswagen each down more than 2.5 percent. Shares of electronics and technology retailer Best Buy fell more than 3 percent in premarket trading Thursday morning after the company reported quarterly earnings. Though the company posted solid quarterly comparable sales and earnings, its online sales growth decelerated. Domestic online comparable sales growth slowed to 12 percent growth in the U.S. from a year ago, compared to 22.5 percent growth. Best Buy's chief financial officer, Corie Barry, added that the company is not upgrading its full fiscal year outlook during the earnings conference call. U.S. stocks finished slightly higher on Wednesday after the Federal Reserve announced it would be comfortable letting inflation temporarily run above its target. The Dow Jones industrial average added more than 50 points at the close, with the Nasdaq and S&P 500 indexes also notching modest gains. In data, existing home sales data for April are due to be published at around 10 a.m. ET, followed closely by the Kansas City Fed manufacturing survey for May. Asian stocks closed mostly lower on Thursday, with investors cautious over fresh trade-related developments as the trade dispute between the U.S. and China remained in focus. In Japan, the Nikkei 225 declined 1.11 percent, or 252.73 points, to 22,437.01 on the firmer yen, extending losses in the last session. Autos traded lower, as did other major exporters as the yen rose around 0.4 percent to trade at 109.58 to the dollar. The broader Topix fell 1.21 percent. Greater China markets were narrowly mixed. The Hang Seng Index edged higher by 0.07 percent by 3:02 p.m. HK/SIN and on the mainland, the Shanghai composite slipped 0.44 percent to 3,154.89. Oil prices recorded their largest one-day drop in two weeks on Thursday, with expectations building that OPEC will end a deal to limit output due to concerns about supplies from Venezuela and Iran. A surprise build up in crude oil inventories in the United States also weighed on prices, driving the spread between Brent crude and U.S. West Texas Intermediate (WTI) close to its widest in three years. International benchmark Brent futures were down 91 cents, or 1.1 percent, at $78.89 per barrel by 8:58 a.m. ET (1258 GMT). WTI crude futures were down 86 cents, or 1.2 percent, at $70.98 a barrel. Gold prices rose for a second session on Thursday, lifted by a weaker dollar, worries about renewed trade tensions and volatile emerging markets. Spot gold was up 0.46 percent at $1,298.93 per ounce at 8:42 a.m. ET. U.S. gold futures for June delivery added 0.68 percent to $1,298.40 per ounce.