Tuesday December 10th


Dow futures drop 100 points after report says US-China trade deal is unlikely this week

U.S. stock index futures fell on Tuesday after a report from the South China Morning Post said China and the U.S. are unlikely to reach a trade deal this week. Around 7:10 a.m. ET, Dow Jones Industrial Average futures were down 100 points, indicating a drop of 117.60 points at the open. S&P 500 and Nasdaq 100 futures also pointed to a lower open. The report said chances of a deal on that front are falling as the U.S. focuses on finalizing a trade deal with Mexico and Canada. Sources told CNBC on Monday that House Democrats and the Trump administration are close to a tentative deal that would replace North American Free Trade Agreement. However, the Morning Post report added that additional tariffs on Chinese goods are not expected to take effect. The U.S. had set Dec. 15 as a deadline for both sides to reach a so-called phase one trade deal. If a deal was not reached by then, the U.S. would implement more tariffs targeting China. The world’s two largest economies have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment. Trade bellwethers Apple and Boeing were down 0.8% and 0.5%, respectively. The VanEck Vectors Semiconductor ETF (SMH) slid 0.9%. Investors will also closely monitor the Federal Reserve as the central bank kicks off its last two-day monetary policy meeting of the year. The Fed is expected to hold rates steady. Major Asian markets were mixed on Tuesday as Chinese inflation data showed a surge in consumer prices in November. Mainland Chinese stocks recovered from an earlier slip to finish their trading day higher, with the Shanghai composite fractionally higher at about 2,917.32. The Shenzhen component added 0.4% to 9,915.87 while the Shenzhen composite also gained 0.384% to around 1,646.82. Hong Kong’s Hang Seng index closed 0.22% lower at 26,436.62. Elsewhere, Japan’s Nikkei 225 declined slightly to close at 23,410.19 while the Topix index dipped fractionally to end its trading day at 1,720.77. South Korea’s Kospi rose 0.45% to close at 2,098.00. Oil prices slipped on Tuesday for a second straight session as the cons of a slowing global demand outlook outweighed the pros of OPEC’s agreement with associated producers at the end of last week to deepen crude output cuts in early 2020. Brent futures were down 34 cents, or 0.5%, at $63.92 per barrel. West Texas Intermediate oil futures were 29 cents, or 0.5%, lower at $58.73 a barrel. The benchmarks fell 0.2% and 0.3% respectively on Monday. Gold prices rose on Tuesday on uncertainty over U.S.-China trade talks ahead of a Dec. 15 tariff deadline and as investors looked to the U.S. Federal Reserve’s rate-setting meeting for cues on its 2020 monetary outlook. Spot gold rose 0.3% to $1,466.20 per ounce and U.S. gold futures gained 0.4% to $1,471.