Trade Fear Intensifies, Bond Yields Plummet, China Threatens Rare-Earth Metals

The U.S. Futures Are Down As Trade Fears Intensify

The U.S. futures are indicating a moderately lower open as trade fears intensify. The Dow Jones and S&P 500 are both looking at a loss of -0.60% at the open while the tech-heavy NASDAQ Composite is indicated down about -0.75%. Today’s move was led by the chip-makers including Nvidia and Micron, all of which are closely linked to China and international trade.

Bond yields continue to fall as well. The drop in the ten-year Treasury rate to 19-months lows is helping fuel negative sentiment. Yesterday and today’s declines in the ten-year rate have deepened the yield-curve inversion furthering fear of global economic recession.

In stock news, shares of Dick’s Sporting Goods are moving sharply higher in the early pre-market session. The company reported stronger than expected revenue and earnings and was able to raise full-year guidance. The increase to full-year guidance is a double-shot of good news as it was unexpected and in the face of rising tariff’s. Just yesterday analysts at Piper Jaffrey warned companies like Best Buy and Dick’s were vulnerable to trade war price increase.

Geopolitics Pressure European Markets To New Lows

Mounting political angst in the EU helped to send the major indices lower in early trading. The FTSE 100, German DAX, and French CAC were all down more than -1.25% at mid-day with the CAC in the lead. The move is spurred by rising trade fears as well as political instability within the Union.

In addition to the never-ending Brexit drama, the rise of Euro-skeptics in last week’s elections and turmoil in Austria and Italy have investors on edge. The latest on Italy is that the EU is considering a fine or other punitive action in response to the country’s inability and inaction to reign in debt.

In stock news shares of Elekta shot to the top of the charts. Shares of the stock gained nearly 20% after the company reported blowout revenue and earnings. Conversely, shares of German Bechtle fell near -8.0% after it missed expectations.

China Threatens Rare-Earth Metals Market

Asian markets were mostly lower after China issued veiled threats it would disrupt the rare-earth metals market. The move would be in retaliation to U.S. trade pressure and intended to leverage China’s position in the global market.

The rare-earth metal market is important not only to the U.S. but all countries involved in technology or defense industries. The Shanghai Composite was the only major index to close with a gain and it was a tepid 0.16%. The Nikkei and Kospi both shed more than -1.20% while the Hang Seng and ASX both lost about -0.60%.