Tuesday December 4th

4-12-2018

US stock futures fall amid doubts over the US-China trade deal

U.S. stock index futures pointed to a negative open on Tuesday amid questions over whether the U.S.-China trade agreement will resolve the two countries' dispute in the long term. At around 8:46 a.m., Dow Jones Industrial Average futures were trading 103 points lower, implying a decline of 93.43 points at the open. S&P 500 and Nasdaq 100 futures also fell. The U.S. and China agreed over the weekend to hold off on any additional tariffs on each other's goods on January 1, in order to allow trade talks to continue. Leaders from the two countries met over dinner at the G-20 summit in Argentina. But discrepancies over when that truce would begin has led to confusion. While President Donald Trump's economic advisor, Larry Kudlow, told reporters Monday that the cease-fire would start from January 1, the White House later issued a corrected statementsaying that the 90-day truce period would start on December 1. The U.S. and China have been engaged in a tense sparring match over trade, with both countries hitting each other's economies with levies on imported goods. Trump's administration has so far slapped tariffs on $250 billion worth of Chinese imports, while Chinese President Xi Jinping's government has imposed tariffs on $110 billion in U.S. goods. Amid doubts over whether the two can prevent further escalation to the trade war, Treasury Secretary Steven Mnuchin on Monday told CNBC that he is "very hopeful" the two countries can turn the trade truce into a "real agreement." Wall Street is also worried about a so-called inverted yield curve. The yield on the three-year Treasury note surpassed its five-year counterpart on Monday. Historically, when short-term yields trade above longer-term rates a recession could follow, though it is often years away after the signal triggers. In terms of economic data, Redbook sales figures are due at 8:55 a.m. ET. Meanwhile, New York Federal Reserve President John Williams is due to give a speech on tightness in the labor market at 10 a.m. ET. Stocks in Asia mostly slipped on Tuesday amid uncertainty about the future of U.S.-China trade relations. Japan's Nikkei 225 fell by 2.39 percent to close at 22,036.05 while the Topix index shed 2.36 percent to 1,649.20 by the end of the trading day. Meanwhile in South Korea, the Kospi slipped 0.82 percent to close at 2,114.35. Hong Kong's Hang Seng index slipped 0.22 percent, as of the final hour of trading. Elsewhere, the mainland Chinese markets, which have been closely watched in relation to Beijing's trade war with Washington, bucked the overall downtrend to see gains. The Shanghai composite rose 0.42 percent to close at around 2,665.96 and the Shenzhen composite advanced 0.430 percent to finish the trading day at about 1,387.49. Oil prices rose more than 2 percent on Tuesday, extending gains ahead of expected output cuts by producer cartel OPEC and a mandated reduction in Canadian supply. International Brent crude oil futures rose $1.55 or 2.5 percent to a high of $63.24 by 0955 GMT. U.S. West Texas Intermediate (WTI) crude futures were $1.25 higher at $54.20. Gold prices gained on Tuesday, after hitting a more than one-month high earlier in the session, as the dollar slipped after the United States and China agreed to a temporary truce in their trade conflict that rattled global markets. Spot gold rose 0.6 percent to $1,238.36 per ounce at 0824 GMT. Prices touched a peak of $1,238.83 earlier in the session, their highest since Oct. 26. U.S. gold futures were up 0.3 percent at $1,243.4 per ounce.