The U.S. Equities Rebound, Global Markets Mixed, Uncertainty Reigns Supreme

Equity markets rebounded in Tuesday trading but trade concerns are still present and dragging on sentiment.
Thomas Hughes
Wall stree direction sign, New York vintage process

The U.S Equities Rebounded In Early Tuesday Trading

The U.S. index futures were pointing to a higher open on Tuesday morning. This follows the worst day for the major U.S. equity indices in nearly four months. The move may signal an end to downward market pressure but traders are cautious, selling could resume at any time. The tech-heavy NASDAQ Composite was in the lead, up 1.0% in pre-market trading, as it has the most exposure to China. The Dow Jones Industrial Average and S&P 500 were both up about 0.75%.

Yesterday’s decline was sparked by the break-down of U.S./China trade talks and possibility tariffs will be increased again. China has already retaliated by raising tariffs to 25% on goods previously hit by levies and analysts believe this is only the beginning. Tariffs may continue to escalate in the near-term until a trade deal is eventually reached.

In stock news, shares of companies with the most exposure to China have been hit the hardest. Topping the list of losers are tech giants Intel and Apple along with industrial heavyweight Caterpillar. Conversely, shares of Coca Cola advanced more than 1.0% despite the company’s global exposure. Analysts at Morgan Stanley say Coca Cola is the top mega-cap staples stock pick. At current prices, the stock yields about 3.30%.

European Markets Move Higher

The European indices were moving higher in early Tuesday trading. The French CAC was in the lead with a gain of 1.15% while the UK FTSE was close behind and the German DAX trailed at 0.55%. Basic Resources was the biggest gainer for the day, up 1.4% at midday.

Shares of VW were also moving higher, up 2.3%, after the company announced a spinoff of its truck unit. Vodafone, another key market mover, was up 1.7% on its news. The troubled telecom says it will cut its dividend but use the funds to pay down debt.

In other news, shares of Bayer fell nearly -3.0% after it lost another major court battle. A judge in the U.S. awarded a couple $2 billion dollars after deciding Roundup caused their cancer. Roundup, owned by Monsanto, became a headache for Bayer last year after it purchased the agricultural chemicals company.

Uncertainty Weighs On Asian Markets

Uncertainty weighed on Asian markets in Tuesday trading. The losses were not as steep as those seen on Wall Street but were nonetheless a sign of cautious traders. The Hong Kong Hang Seng led the decline with a loss of -1.5%, the next biggest loser was the Australian ASX at -0.90%. The Japanese Nikkei shed -0.6%, led by Softbank’s -5.44% decline, while the Shanghai Composite fell -0.70%. In Korea, traders were a little more optimistic. The Kospi rose 0.15% and aided by SK Hynix 1.5%.

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