Equities Fall On Trade Woe, Brexit Talks Fail, U.S.-China Divide Widens

The U.S. Equities Are Down In Early Trading

The U.S. equities were down and edging lower in early premarket trading. The tech-heavy NASDAQ led with a loss of -0.90% while the Dow Industrials and S&P 500 were both down about -0.75%. The move is sparked by intensifying tensions between the U.S. and China that threaten to destabilize world trade. The latest development is Trumps block on Huawei, a move that would have far-reaching repercussions if enforced. Shares of Huawei’s U.S. suppliers were among today’s biggest losers. Shares of Qualcomm led with a loss of -1.80%.

Earnings are still in the spotlight as reports from a number of names came in mixed during the overnight session. Deere reported just before the opening bell delivering better than expected revenue and solid guidance. Shares of the stock fell however due to the impact of trade relations on earnings and guidance. Deere is down-4.0%. Shares of NVIDIA were up more than 6% in after-hours trading Thursday. The company delivered a solid beat on the back of a gaming recovery but the stock pared the gains before today’s open. There are no significant reports after the close of today’s session. The only economic data is consumer sentiment at 10 AM Eastern.

Brexit Talks Fail Again, There Is No Hope For May

EU markets were down in today’s session as trade fear and Brexit deadlock weigh on equities. The German DAX was in the lead at -1.15% with the CAC at -0.75% and the UK FTSE 100 about -0.50% in midday trading. In the UK, the Labour Party leader says the Brexit talks have gone as far as they can go indicating no chance May’s deal will pass next month. The news is a blow to the talks and leaves the UK in a precarious position. Auto’s were the leading sector, down about 1.5%, with shares of BMW at the fore down -5.7%.

The Travel and Leisure sector was among today’s few advancing sectors. This move comes despite a -30% plunge in shares of Thomas Cook. Thomas Cook received a downgrade from Citigroup, to sell, after it issued another profit warning.

Asia Mixed, China Falls Hard On Trade Fear

Asian markets were firmly mixed with some markets moving higher and China moving lower. The Japanese Nikkei and Australian ASX were both up, 0.90% and 0.60%, while China and Hong Kong both saw sharp losses. Mainland Chinese shares on the Shanghai exchange led the rout sending the Shanghai Composite down -2.5%. The Hang Seng fared a little better but trade war fear and its impact on business carried it down more than -1.0%.

With trade tensions on the rise analysts now estimate a deal may not be reached until the end of the year. Even so, any deal that is reached is now likely to be light on substance; just enough to keep global trade moving. The risk now is that tensions will escalate to the point of Cold War-era relations.