Tuesday August 2nd


Stock futures slip as U.S.-China tensions simmer over Pelosi’s expected trip to Taiwan

U.S. stock index futures fell Tuesday morning as tensions between the U.S. and China increased ahead of an expected visit to Taiwan by House Speaker Nancy Pelosi. Futures tied to the Dow Jones Industrial Average were 166 points lower, or 0.52%. S&P 500 futures slid 0.60%, and Nasdaq 100 futures dropped 0.77%. Shares of Caterpillar are weighing on Dow futures after the company reported earnings that missed revenue expectations, sending the stock down more than 3% before the bell. Pelosi was expected to visit Taiwan and spend Tuesday night there, Reuters reported, citing sources. Leading up to the trip, Chinese officials threatened to take action if Pelosi moved forward with the visit. Pelosi would become the first House Speaker since Newt Gingrich in 1997 to visit Taiwan. “We would like to tell the United States once again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity,” Chinese foreign ministry spokesman Zhao Lijian said in a daily briefing Monday. Traders are also awaiting another raft of earnings from companies such as Starbucks, PayPal and Advanced Micro Devices. Tuesday’s moves came after the major averages fell on the first day of August. The S&P 500 shed 0.28% to end at 4,118.63 while the Nasdaq Composite inched 0.18% lower and closed at 12,368.98. The Dow Jones Industrial Average slipped 46.73 points, or 0.14%, to end at 32,798.40. Last month, the major averages posted their biggest one-month gains since 2020. “I think for sure it remains a bear market bounce,” Kevin Simpson of Capital Wealth Planning told CNBC’s “Closing Bell: Overtime” on Monday. ”... I think it was awesome the way the markets traded in July, but I think we’re not through any type of capitulation. The headwinds are just too rampant. On the economic data front, investors this week are awaiting the July nonfarm payrolls report slated for release Friday for further clues into the state of the economy and the job market. Mainland China and Hong Kong markets led losses in Asia on Tuesday as geopolitical tensions rose over U.S. House Speaker Nancy Pelosi’s visit to Taiwan. The Shanghai Composite lost 2.26% to 3,186.27 and the Shenzhen Component shed 2.37% 12,120.02. At session lows, both indexes were down more than 3%. Hong Kong’s Hang Seng index fell 2.36% to 19,689.21, with heavyweights like Alibaba and Meituan falling 2.85% and 2.11% respectively. The Hang Seng Tech index slipped 3.01%. Elsewhere in Asia, the Nikkei 225 in Japan slipped 1.42% to close at 27,594.73, and the Topix index lost 1.77% to 1,925.49. In South Korea, the Kospi shed 0.52% to 2,439.62 and the Kosdaq declined 0.4% to 804.34. Oil slipped on Tuesday as investors absorbed a bleak outlook for fuel demand with data pointing to a global manufacturing downturn just as OPEC+ producers meet this week to decide whether to increase supply. Surveys showed on Monday that factories across the United States, Europe and Asia struggled for momentum in July as flagging global demand and China’s strict COVID-19 restrictions slowed production. “These readings did nothing to mitigate the fears of recession,” said Tamas Varga at oil broker PVM. Brent crude was down 3 cents at $100.00 a barrel, while U.S. West Texas Intermediate crude fell 16 cents to $93.73. Gold surrendered earlier gains to trade little changed on Tuesday as the U.S. dollar inched higher, although a dip in Treasury yields and growing recession fears kept bullion near four-week peak. Spot gold was flat around $1,771.29 per ounce by 0843 GMT, after hitting its highest since July 5 at $1,780.39 earlier in the session. U.S. gold futures were unchanged at $1,787.10.