Monday June 11th

11-06-2018

US stock futures struggle for gains after turbulent G-7 meeting; N. Korea summit in focus

U.S. stock index futures held steady ahead of Monday's open after President Donald Trump lashed out at U.S. allies Canada and Europe on trade issues at the G-7 meeting over the weekend. Wall Street was also preparing for the hotly anticipated meeting between Trump and North Korean leader Kim Jong Un in Singapore, set to occur on Tuesday. Around 8:10 a.m. ET, Dow futures fell 8 points, indicating a flat open. The Nasdaq and the S&P 500 futures also indicated a relatively flat start to the session for their respective markets. Despite the stagnant futures on Monday, the major U.S. indexes all ended last week at least 1.2 percent higher. President Trump and his administration escalated criticism of Canadian Prime Minister Justin Trudeau and international trade over the weekend at the annual G-7 summit that took place in Quebec, Canada. The conclusion of the two-day summit, where Trump met with leaders from Europe and Canada, resulted in the U.S. incumbent refusing to endorse the joint G-7 statement that called for a reduction of tariffs — sparking tensions between him and fellow G-7 leaders. He also criticized Canadian counterpart Trudeau of "betrayal," saying that the prime minister's comments on U.S. tariffs were "very dishonest & weak." The Canadian dollar, plagued by fears trade tensions, fell 0.7 percent against the dollar to C$1.30. The Mexican peso also weakened 0.6 percent to about 20.41 pesos per dollar. The turbulent trade talks ended as the U.S. president headed to Singapore, where he's set to meet with North Korean leader Kim Jong Un in a historic sit-down on Tuesday. The two are expected to discuss future relations and denuclearization, alongside other subjects. While no major concrete results are expected to come out of this initial meeting, investors hope the meeting will reinforce relations between the isolated state of North Korea and the rest of the world. Despite trade tensions and the summit with North Korea, U.S. Treasurys slipped across the board Monday, with the yield on the benchmark 10-year note rising a few basis points to 2.96 percent. Bond yields move inversely with their prices. Investors are also looking ahead to a meeting of the U.S. Federal Reserve, due to take place on Tuesday and Wednesday. The U.S. central bank is expected to announce a quarter-point increase in interest rates as it seeks to normalize monetary policy with the economy showing signs of health. Earlier this month, data revealed that the U.S. economy added 223,000 jobs in May, well ahead of economist expectations of 188,000 and adding to a growing pool of evidence that the economy is nearing full employment. Last week, initial claims for state unemployment benefits also decreased 1,000 to a seasonally adjusted 222,000 — economists had estimated an increase. Markets in the region mostly closed higher on Monday, shrugging off the cautious mood seen earlier as investors focused on a mix of trade tensions and a landmark meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un. Japan's Nikkei 225 turned more positive through the session, with the index closing higher by 0.48 percent, or 109.54 points, at 22,804.04 amid broad gains. Elsewhere, South Korea's benchmark Kospi rose 0.76 percent to 2,470.15, outperforming other regional markets as manufacturing names advanced. Hong Kong's Hang Seng Index added 0.43 percent by 3:05 p.m. HK/SIN, but mainland stocks were downbeat. The Shanghai compositeslipped 0.48 percent to end at 3,052.36, but was off its intraday low. Oil prices slipped on Monday, pulled down by rising Russian production and the highest U.S. drilling activity in more than three years but supported by concerns over future Iranian and Venezuelan output. Analysts expect higher U.S. output to offset supply curbs by the Organization of the Petroleum Exporting Countries, which have been in place for 18 months and have pushed up prices significantly over the last year. Benchmark Brent crude was down 15 cents at $76.31 a barrel by 0915 GMT. U.S. light crude was 10 cents lower at $65.64. The number of new rigs drilling for oil in the United States rose by one last week to 862, its highest since March 2015, data from energy services firm Baker Hughes showed. That implies U.S. crude output, already at a record high of 10.8 million barrels per day (bpd), will climb further. Gold traded steady on Monday with investors awaiting key central bank policy meetings and the United States-North Korea summit this week for direction. Spot gold was steady at $1,297.66 per ounce at 8:38 a.m. ET, while U.S. gold futures for August delivery were flat at $1,302.20.