U.S. Moves Lower As Trade War Escalates, Politics Roils EU Markets, Inflation Surges In China

The global markets are mixed as trade war conditions escalate and economic data is stronger than expected.
Thomas Hughes

The U.S. Futures Are Lower After Thursday’s Rally

The U.S. futures are moving lower on Friday despite the strong updraft in prices on Thursday. The move is driven by slowing escalating trade war conditions that today includes word on Huawei. Huawei has been at the center of U.S. complaints and now the rumor is White House officials will delay approvals previously promised. This is the latest in a series of moves that has rocked the market this week including increased tariffs, China’s refusal to buy U.S. agriculture products, and currency manipulation.

Chips led today’s market lower with a loss of -1.0%. Micron, AMD and INTC are all down in early trading. Lion’s gate was one of few issues moving higher on Friday after it reported strong results for the 2nd quarter. The entertainment company says success with this year’s films and strength in STARZ is the reason why. The NASDAQ Composite led the indices with a loss of -0.89%. The broad market S&P 500 is runner up on Friday with a loss near -0.65% while the Dow Jones Industrials is close behind at -0.55%.

Italian Politics Comes To A Head

European markets are broadly lower at midday on Friday as Italian politics comes to a head. Overnight, the leader of Italy’s coalition government said the government wasn’t working and called for new elections. The move is no surprise but still a blow to fragile markets. The German DAX led losses with a decline of -1.16% while the CAC followed close behind. The UK FTSE 100 fared better and traded just below break-even for the day.

Traders are also watching developments in the U.S. The escalating trade war caused bond yields to crash and increase the threat of recession. In economic news, UK GDP fell -0.2% and contracted for the first time since 2012. The good news is the data is slightly better than expected. In stock news, shares of WPP shot up by 7.0% after the advertising giant reported better than expected results.

Asian Markets Are Mixed After Stronger Than Expected Data

The Asian indices closed mixed on Friday after stronger than expected data in China and Japan. In China, hot consumer-level inflation threatens the stability of a nation in peril. China is faced with stimulating growth in the face of escalating trade war conditions but must control inflation as well. At 2.8% the CPI is above what most economists consider healthy. Alarmingly, food inflation surged 9.1%.

In Japan, GDP came in at 1.8% and better than expected. The data is not strong but enough to stave off any anticipated easing from the BOJ. The Shanghai Composite led decliners with a loss of -0.71% with the Hang Seng right behind. The Korean Kospi led advancing indices with a gain of 0.89% while the Nikkei rose 0.44% and the ASX climbed 0.25%.

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