The major U.S. index futures are pointing to a lower opening on Friday following the upward move seen over the course of the three previous sessions.
Renewed trade war concerns may weigh on the markets after President Donald Trump threatened China with $100 billion of additional tariffs.
The threat from Trump comes after the U.S. and China traded tit-for-tat tariff announcements earlier in the week, leading to considerable volatility on Wall Street.
Responding to the threat from Trump, the Chinese Commerce Ministry declared it would “not hesitate” to retaliate to new tariffs “at any cost.”
However, Trump said the U.S. is still prepared to have discussions with China in support of its commitment to achieving free, fair, and reciprocal trade.
Negative sentiment may also be generated by a report from the Labor Department showing U.S. job growth slowed by much more than anticipated in the month of March.
After turning higher over the course of the trading session on Wednesday, stocks saw some further upside during trading on Thursday. The major averages fluctuated in afternoon trading but managed to end the day firmly in positive territory.
The major averages closed higher for the third straight day following the sell-off on Monday. The Dow jumped 240.92 points or 1 percent to 24,505.22, the Nasdaq rose 34.44 points or 0.5 percent to 7,076.55 and the S&P 500 climbed 18.15 points or 0.7 percent to 2,662.84.
The continued strength on Wall Street reflected easing concerns about a potential trade war between the U.S. and China, which have recently led to considerable volatility on Wall Street.
The U.S. and China have engaged in tit-for-tat tariff announcements, but traders seem optimistic that the threats are only a precursor to negotiations of a trade agreement between the two countries.
Amid the focus on trade relations, the Commerce Department released a report showing the U.S. trade deficit widened by more than anticipated in the month of February.
The Commerce Department said the trade deficit widened to $57.6 billion in February from a revised $56.7 billion in January. Economists had expected the trade deficit to widen to $56.8 billion.
The wider than expected trade deficit in February was the widest since the $60.2 billion trade deficit recorded in October of 2008.
However, Andrew Hunter, U.S. Economist at Capital Economics, noted the wider trade deficit was entirely due to a one-off royalty payment for broadcasting rights to the Winter Olympics.
A separate report from the Labor Department showed a bigger than expected increase in initial jobless claims in the week ended March 31st.
The report said initial jobless claims climbed to 242,000, an increase of 24,000 from the previous week’s revised level of 218,000. Economists had expected jobless claims to rise to 225,000.
Energy stocks showed a substantial move to the upside on the day amid a modest increase by the price of crude oil. Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 3.4 percent, the NYSE Arca Natural Gas Index jumped by 2.8 percent and the NYSE Arca Oil Index advanced by 1.9 percent.
Considerable strength was also visible among steel stocks, as reflected by the 2.8 percent gain posted by the NYSE Arca Steel Index. The strength in the sector reflected the easing trade war concerns.
Chemical stocks also saw significant strength, driving the S&P Chemicals Index up by 1.9 percent. The index continued to rebound after hitting its lowest closing level in nearly seven months on Monday.
Brokerage, retail and housing stocks also moved notably higher, while some weakness emerged among semiconductor and biotechnology stocks.
Commodity, Currency Markets
Crude oil futures are slipping $0.32 to $63.22 a barrel after edging up $0.17 to $63.54 a barrel on Thursday. Meanwhile, after tumbling $11.70 to $1,328.50 an ounce in the previous session, gold futures are rising $2.90 to $1,331.40 an ounce.
On the currency front, the U.S. dollar is trading at 107.39 yen, unchanged compared to the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2221 compared to yesterday’s $1.2240.
Asian stocks turned in a mixed performance on Friday as worries about a global trade war intensified and investors waited for cues from the U.S. Labor Department’s closely watched monthly jobs report for March due out later in the day.
Gold edged up and the dollar faltered after U.S. President Donald Trump said he has instructed his trade officials to consider $100 billion in additional tariffs on China.
Japanese shares fell as the yen rose against the dollar in light of Trump’s new tariff threat. The Nikkei 225 Index slid 77.90 points or 0.4 percent to 21,567.52, while the broader Topix index closed 0.3 percent lower at 1,719.30.
Shipping companies and semiconductor stocks were among the prominent decliners. Among the best performers, Daiichi Sankyo, Seven & I Holdings and FamilyMart UNY Holdings gained 3-5 percent.
On the data front, the Ministry of Internal Affairs and Communications said that average household spending in Japan grew 0.1 percent year-on-year in February, coming in at 265,614 yen. That was shy of expectations for an increase of 0.3 percent.
Australian shares ended a choppy session little changed with a negative bias after news of Trump’s plan to impose additional tariffs on China. While major banks ended marginally lower, ANZ edged up slightly after a brokerage upgrade.
Woodside Petroleum advanced 1.1 percent and Santos rose half a percent after crude oil prices edged higher overnight. Mining heavyweight BHP Billiton rose half a percent and smaller rival Fortescue Metals Group rallied 2.4 percent.
Shares of Myer Holdings soared 7.3 percent. The Australian newspaper reported that rival David Jones’ South African parent company Woolworths may be interested in acquiring the company.
Meanwhile, Hong Kong’s Hang Seng Index surged up 326.25 points or 1.1 percent to 29,844.94. The markets in mainland China remained closed for a holiday.
European stocks have fallen on Friday after U.S. President Donald Trump vowed an additional $100 billion in tariffs on Chinese imports, dashing hopes for a cooling of trade tensions.
While the German DAX Index has fallen by 0.8 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.’s FTSE 100 Index is down by 0.3 percent.
Marks & Spencer has tumbled in London after Citigroup downgraded its rating on the retailer’s stock to Neutral from Buy.
Deutsche Bank shares have also dropped after Bloomberg reported Matt Zames, a former JPMorgan Chase executive, is among candidates contacted by recruiters in recent weeks to replace the German bank’s Chief Executive Officer John Cryan.
Vivendi has moved to the downside after the French media firm announced its proposed list of candidates for Telecom Italia’s board.
Meanwhile, Telecom Italia has rallied after Italian state lender CDP said it would buy a 5 percent stake in the firm. Utility Suez has also moved higher in reaction to a bullish broker note.
On the data front, German industrial production unexpectedly declined in February, data from Destatis revealed. Output dropped 1.6 percent in February, in contrast to a revised 0.1 percent uptick in January.
France’s trade deficit narrowed to 5.2 billion euros in February from 5.4 billion euros in January as the pace of decline in imports outpaced the fall in exports, the customs office said.
Separately, data from the Bank of France showed that France’s seasonally and working-day-adjusted current account deficit stood at 2.0 billion euros in February, unchanged from January.
U.S. Economic Reports
After reporting a substantial increase in U.S. employment in the previous month, the Labor Department released a report showing job growth slowed by much more than anticipated in the month of March.
The Labor Department said non-farm payroll employment rose by 103,000 jobs in March after spiking by an upwardly revised 326,000 jobs in February.
Economists had expected an increase of about 193,000 jobs compared to the jump of 313,000 jobs originally reported for the previous month.
The report also said the unemployment rate came in at 4.1 percent in March, unchanged from the five previous months. The unemployment rate had been expected to edge down to 4.0 percent.
Meanwhile, the Labor Department said the annual rate of growth in average hourly employee earnings accelerated to 2.7 percent in March from 2.6 percent in February.
At 1:30 pm ET, Federal Reserve Chairman Jerome Powell is due to deliver a speech on the economic outlook at the Economic Club of Chicago.
The Fed is scheduled to release its report on consumer credit in the month of February at 3 pm ET. Consumer credit is expected to climb by $15.0 billion.
Stocks In Focus
Shares of WD-40 (WDFC) are moving to the downside in pre-market trading after the lubricants maker reported better than expected fiscal second quarter earnings but on weaker than expected revenues.
Online retail giant Amazon (AMZN) may also come under pressure after President Donald Trump continued his attacks on the company, which he said is “not on an even playing field.”
Shares of Urban Outfitters (URBN) could also see early weakness after the apparel retailer announced the departure of David McCreight, the president and CEO of its Anthropologie unit.
On the other hand, shares of Greenbrier (GBX) are seeing notable pre-market strength after the railroad freight car equipment maker reported fiscal second quarter results that exceeded analyst estimates.
Warehouse club operator PriceSmart (PSMT) may also see early strength after reporting better than expected fiscal second quarter results.
by RTTNews Staff Writer
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