Tuesday September 18th

18-09-2018

Stock futures bounce as new US tariffs on China are lower than feared

U.S. stock index futures rose on Tuesday as the United States slapped new tariffs on Chinese goods that were lower than expected. Dow Jones Industrial Average futures rose 59 points, pointing to a gain of 65.88 points at the open. S&P 500 and Nasdaq 100 futures also rose. The futures initially traded lower after the tariffs were announced. Late Monday, the Trump administration announced the U.S. will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year. Commerce Secretary Wilbur Ross said the new tariffs are aimed at modifying China's behavior and leveling the playing field for U.S. companies there. China is "out of bullets" to retaliate, Ross told CNBC's "Squawk Box." The latest action aggravates a growing trade dispute between the world's two largest economies, with Beijing prepared to impose sanctions of its own. In fact on Tuesday, China stated that it had no choice but to retaliate, in order to safeguard its rights and interest in a free trade world. The announcement came after National Economic Council Director Larry Kudlow told CNBC's Becky Quick that Trump has "not been satisfied" with the trade talks with Beijing. The Wall Street Journal had reported earlier that Trump was set to move ahead with tariffs on $200 billion in Chinese goods. The report followed other news outlets saying that U.S. officials were trying to restart U.S.-China trade talks. Fears of escalating trade tensions between the U.S. and China have knocked equities off of record highs set last month. The S&P 500 and Nasdaq Composite set all-time highs to end August. This month, however, both indexes are down 0.4 percent and 2.6 percent, respectively, through Monday's close. However, U.S. futures have have been buoyed somewhat in recent hours, on the back of relatively positive sessions seen in Asia and Europe on Tuesday. Although trade concerns are likely to dominate market sentiment Tuesday, a number of economic releases are due. At 8:30 a.m. ET, the Business Leaders Survey is expected to be released, followed by the NAHB/Wells Fargo Housing Market Index at 10 a.m ET, and Treasury International Capital (TIC) data at 4 p.m. ET. In earnings news, AutoZone, General Mills, and Cracker Barrel are all scheduled to post their latest financial updates. Meantime, investors will keep an eye on stocks impacted by natural disasters as former hurricane Florence continues to wreak havoc on a number of U.S. states. Asia markets were largely positive on Tuesday, despite an escalation in trade tensions between the United States and China. Japan's Nikkei 225 rose 1.41 percent to close at 23,420.54, while the Topix index ended the trading day 1.81 percent higher at 1,759.88. In South Korea, the Kospi was up by 0.26 percent to close at 2,308.98 as the performance of blue chip stocks was mixed. In the Greater China region, markets largely saw a recovery from their earlier slump. As of 3:30 p.m. Hong Kong's Hang Seng index was up by 0.6 percent even though tech giant Tencentremained down by 0.25 percent. Over on the mainland, markets ended the trading day higher. The Shanghai composite advanced by 1.82 percent to close at 2,699.95 while the Shenzhen compositeclimbed by 1.976 percent to close at 1,404.15. Oil firmed on Tuesday on signs that OPEC would not be prepared to raise output to address shrinking supplies from Iran and as Saudi Arabia signalled it was in no rush to bring prices down. Brent crude futures were up $1.14 a barrel to $79.19 a barrel, after hitting a high of $79.37. U.S. West Texas Intermediate (WTI) crude was up 95 cents at $69.86 per barrel, after rising over $1 to $69.95. Gold prices fell on Tuesday as the U.S. dollar steadied amid concerns of an escalation in global trade tensions after the United States imposed a new round of tariffs on Chinese imports. Spot gold fell 0.3 percent to $1,197.51 an ounce at 0732 GMT, after rising 0.6 percent in the previous session. U.S. gold futures were down 0.3 percent at $1,202.20 an ounce.