Trade Talks Fail, Futures Fall Hard, Global Equities Market Is On EdgeTrade talks fail, markets shed -2.0% in early trading, the bear market has started.
The U.S. Futures Are Down -2.0% On Trade Woe
The U.S. equity market is facing sharp losses in early Monday trading. The Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite are all down more than -2.0%. The tech-heavy NASDAQ Composite is in the lead with a decline of -2.65%. The move was sparked by failing U.S./Sino trade talks and the imposition of another round of tariffs. President Donald Trump hiked U.S. tariffs to 25% on $200 billion in Chinese goods last Friday. President Xi Jinping countered the move with an increase to 25% on $60 billion in U.S. goods.
Shares of index heavy-weights Boeing, Caterpillar, Apple, and Intel were all trading lower. Those with the most exposure to China were down close to -3.0% if not more. Boeing was among the hardest hit, down -3.4%, on word it may be singled out in by China in the trade war.
While trade will be a top concern for the market this week it is not the only market moving event. On the economic front, we are expecting a report on U.S. Retail Sales, two reads on manufacturing, housing starts & building permits, and consumer sentiment. In earnings, the season is winding down but there are still quite a few big names left to report. This week will include several top retail/consumer names including Macy’s and Ralph Lauren.
Global Market Down On Trade
Global markets were down on today’s trade news. In the EU, losses were broad but led by the DAX. The German DAX was down nearly -1.50% at midday and indicated lower. The French CAC was down about -1.0% while the FTSE 100 had shed a lighter -0.45%. Autos were among the biggest losers with their exposure to China, down an average -2.6%. On the flip-side, the energy sector saw big gains as oil prices rise. Stocks in that sector were up about 3.5%.
Markets On Edge, No Trade Deal In Sight
Asian markets were broadly lower in Monday trading although losses were not evenly spread. The Korean Kospi led the rout with a loss near -1.40% while the Shanghai Composite fell about -1.20%. Markets in Japan and Australia were less affected if still lower with declines of -.72% and -0.21% respectively. Equities markets in Hong Kong were closed for a holiday.
In trade news, Chinese President Xi Jinping is firing back at Trump and his Tweets. While Trump claims China backed out of the “greatest deal” Xi claims no one can make China swallow bitter fruit. Xi says Trump is jeopardizing trade relations and should back down on his latest round of threats.
While there are no concrete plans for another trade meeting at this time both sides seem inclined to continue the talks. Trump adviser Larry Kudlow says there may be a face to face meeting between Trump and Xi at the G-20 in Japan.