Monday June 3rd

3-06-2019

Stock futures fall after China blames US for trade war, Alphabet shares drop

U.S. stock index futures fell on Monday, the first trading day of June, after China’s rhetoric on U.S. trade relationship intensified over the weekend. At around 8 a.m. ET, Dow Jones Industrial Average futures slipped 58 points, indicating a drop of 60 points at the open. Futures on the S&P 500 and Nasdaq 100 also fell. The Dow came into Monday’s session having logged in six straight weeks of losses, the index’s longest weekly slide since 2011. Shares of Boeing, a trade bellwether of global trade, fell 1.2%. Alphabet shares also dropped 3.4% after the Justice Department is reportedly investigating the tech company for antitrust violations. Chinese Vice Commerce Minister Wang Shouwen said in a white paper Sunday that Washington would not be able to use pressure to force a trade deal on Beijing. He also refused to say whether the leaders of both countries would meet at the G-20 summit to work out an agreement later this month. Wang added: “The U.S. has backtracked, and when you give them an inch, they want a yard.” The remarks from Wang follow a month of heightened trade tensions between the world’s largest economies. The U.S. hiked tariffs on $200 billion worth of Chinese goods in May. China retaliated with higher tariffs on U.S. imports. Trade worries also rattled Wall Street last week after President Donald Trump threatened to slap a 5% charge on all imports from Mexico. The threat sent stocks tumbling on Friday. On the data front, a final reading of manufacturing PMI (Purchasing Managers’ Index) data for May will be released at around 9:45 a.m. ET. The Institute for Supply Management (ISM) manufacturing index for May, construction spending figures for April and latest light vehicle sales data will all follow slightly later in the session. Stocks in Asia were mixed on Monday amid increasing concerns over the state of global trade. Mainland Chinese shares closed lower, with the Shanghai composite slipping 0.3% to 2,890.08 and the Shenzhen component declining 0.74% to 8,856.99. The Shenzhen composite also shed 1.043% to 1,515.89. Over in Hong Kong, the Hang Seng index declined 0.15%. In Japan, the Nikkei 225 fell 0.92% on the day to 20,410.88. The Topix index also shed 0.88% to close at 1,498.96. Over in South Korea, the Kospi added 1.28% to close at 2,067.85. Oil prices rose on Monday after reassurances from top oil exporter Saudi Arabia offered some respite from last week’s heavy losses as deepening U.S. trade wars fanned fears of a global economic slowdown. Saudi, the de-facto leader of OPEC, indicated that the group of oil producers together with Russia would continue managing global crude supplies to avoid a surplus. “We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” the Saudi-owned Arab News newspaper cited the kingdom’s Energy Minister Khalid al-Falih as saying. Front-month Brent crude futures were up 60 cents, or 1%, at $62.59 around 8:05 a.m. ET (1205 GMT). Prices dropped by more than 3% on Friday, with May recording the biggest monthly loss in six months. U.S. West Texas Intermediate crude futures rose 89 cents, or 1.7%, to $54.38 per barrel. Gold prices rose on Monday to their highest in more than two months on worries that U.S.-Chinese trade tensions and Washington’s threat of tariffs on Mexico would hurt the global economy. Spot gold was up 0.7% at $1,314.20 per ounce at 1012 GMT, after touching its highest since March 27 at $1,315.59. U.S. gold futures rose 0.6% to $1,319.50 an ounce.