Futures Track Lower, Tough Trade Talks Weighs On Equities, China Inflation Hits 18-Month High

Global markets move lower as trade rhetoric escalates between the U.S. and China.
Thomas Hughes

The U.S. Futures Are Tracking Lower, The June Rally Hits A Snag

The U.S. futures are indicating a broadly lower open on Wednesday morning. The blue-chip Dow Jones Industrials and broad-market S&P 500 are both indicated to open down about -0.25%. The tech-heavy NASDAQ Composite is in the lead with an indicated open -0.45% below Tuesday’s close. The move comes after a series of remarks from President Trump that have intensified trade tensions with China. Trump says he is in no hurry to end the tariffs, he sees no need to make a deal unless China concedes to five major points.  Trump and Xi expected to meet at the end of this month but no deal is expected.

On the economic front, traders were closely monitoring today’s data which includes a read on CPI. The CPI came in a bit shy of expectations and intensified expectation the FOMC would cut rates later this year. The headline CPI figure is up 1.8% YOY as lower gas prices offset higher food prices. At the core level, CPI is up 2.0% YOY and also shy of expectations.

In stock news, shares of Beyond Meat are in freefall after hitting a post-IPO high last week. The shares are still more than 200% above the IPO price and Wall Street has turned bearish. Today’s news includes a word from the last remaining bull on Wall Street turns bearish.

Trade Tensions Weight On EU Markets

The major EU indices are moving lower on Wednesday as tough trade talk weighs on outlook. The French CAC is in the lead with a loss near -0.85%, the UK FTSE 100 and German DAX are trailing with losses of -0.80% and -0.60%. The move, sparked by Trump’s tough talk, deepened in the wake of China’s response. China says it vows a tough response if the U.S. increases tariffs again. ECB chief Mario Draghi and IMF boss Christine Lagarde both warned about the impact of trade tensions in comments this morning. In Brexit news, the opposition Labour Party is moving to block the possibility of a no-Deal Brexit.

Asian Markets Move Lower Despite Positive Inflation Data

Asian markets moved broadly lower as trade tensions mount. Despite the impact of tariffs, however, Chinese CPI and PPI came in as expected showing demand within the nation is still holding up. The PPI figure rose a tepid 0.6% YOY but as expected, the CPI index rose 2.7% YOY and is above consensus. CPI is now at a 15-month high and at levels where the PBOC may be forced to act.

The Hong Kong Hang Seng Index was the day’s biggest loser, down -1.17%, as protests within the Chinese protectorate escalate. The Shanghai Composite was down a less robust -0.56% while others in the region posted much smaller losses.

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