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U.S. Futures Volatile In Early Trading, EU Mixed After G-7, Asia Falls Hard As Trade War Escalates

The global markets are volatile on Monday following a weekend of major geopolitical events. Caution is still the name of the game.
Thomas Hughes

The U.S. Futures Are Volatile In Early Monday Trading

The U.S. futures are volatile in early Monday trading after a weekend of major geopolitical events. Topping the list is the escalation of trade war rhetoric that occurred late last week. China retaliated with additional tariffs on U.S. products and then the U.S. did the same. The escalation took the trade war to a new level and sent the major index futures down nearly -3.0%. Early Monday morning,  President Donald Trump told reporters at the G-7 meeting China had phoned and asked to restart negotiations. Trump says the two countries will begin talking seriously about a deal. The Dow Jones Industrial Average is up about 0.65%, the S&P 500 about 0.40%, and the NASDAQ Composite 0.50%.

In economic news, Durable Goods orders were much better than expected although the sub-indices were a bit mixed. At the headline, durables rose 2.1% versus an expected 1.1% but last month was revised lower. Ex-transportation durables fell -0.4% while core capital expenditures rose 0.4% versus an expected 0.0%. There are no earnings reports of note before the open or after the close. This week’s trading will be dominated by trade news and economic data. Later this week traders will be watching for a GDP revision and August Income, Spending, and Consumer Inflation.

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European Markets Are Mixed On Monday

The European markets are mixed on Monday as traders digest the weekend’s news and wait on what might happen next. The major indices had been down hard in early trading but pared the losses to trade near break-even by midday. The DAX is up about 0.25%, the CAC 0.40%, while the FTSE 100 is down about -0.50%. Health stocks are among today’s laggards, down about -0.45%, while shares of steel manufacturers Arcelor Mittal and Thyssenkrupp are both up nearly 2.0%.

One of the talking points and one of contention is France’s planned tax on big tech. The tax, labeled the Digital Tax, would hit companies like Google, Amazon, and Facebook with a 3% levy. President Trump is not pleased with the idea and likely to retaliate if the tax is made law.

Asian Markets Fall Hard On Trade Woe

Shares in Asia were sharply lower on Monday having closed long before Trump’s trade news hit the wires. The Japanese Nikkei fell the hardest, shedding -2.17% despite Trump and Abe reaching a trade deal-in-principle. The Hong Kong Hang Seng was also down nearly -2.0.% after another weekend of violent protests. The Korean Kospi shed -1.64% on escalating tensions between South Korea and Japan while the Shanghai and ASX both close about -1.20% lower.

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