The major U.S. index futures are pointing to a higher opening on Monday following the sell-off seen in the previous session.
Traders may look to pick up stocks at reduced levels despite lingering concerns about a potential trade war between the U.S. and China.
Stocks moved sharply lower over the course of the trading session on Friday, as trade war concerns once again resurfaced. After closing higher for three straight days, the major averages showed a substantial move back to the downside.
The major averages climbed off their worst levels going into the close but still ended the day firmly in the red. The Dow plummeted 572.46 points or 2.3 percent to 23,932.76, the Nasdaq dove 161.44 to 6,915.11 and the S&P 500 plunged 58.37 points or 2.2 percent to 2,604.47.
With the sharp pullback on the day, the major averages closed lower for the week. The Nasdaq tumbled by 2.1 percent, the S&P 500 slumped by 1.4 percent and the Dow slid by 0.7 percent.
The sell-off on Wall Street came amid renewed trade war concerns after President Donald Trump threatened to impose $100 billion of additional tariffs on Chinese imports.
Trump noted in a statement on Thursday that the U.S. Trade Representative recently announced $50 billion in proposed tariffs on imports from China over intellectual-property violations.
China retaliated by announcing plans to impose a 25 percent tariff on $50 billion worth of U.S. exports, including aircraft, cars, and soybeans, which Trump called an effort to harm U.S. farmers and manufacturers.
“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said.
He added, “I have also instructed the Secretary of Agriculture, with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests.”
Responding to the threat from Trump, the Chinese government declared it would retaliate to new tariffs “with force and without hesitation.”
Negative sentiment was also generated by a report from the Labor Department showing U.S. 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.
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.
The major averages saw further downside as Federal Reserve Chairman Jerome Powell delivered remarks about the economic outlook at the Economic Club of Chicago.
Powell reiterated the belief that further gradual increases in interest rates will best promote the Fed’s goals of achieving maximum employment and stable prices.
Some traders had apparently been hoping Powell would signal a slower pace of rate hikes due to the recent volatility on Wall Street.
Biotechnology stocks turned in some of the market’s worst performances on the day, dragging the NYSE Arca Biotechnology Index down by 3.2 percent. With the steep drop, the index tumbled to its lowest closing level in well over three months.
Considerable weakness was also visible among semiconductor stocks, as reflected by the 3.1 percent loss posted by the Philadelphia Semiconductor Index. The index fell to a nearly two-month closing low.
The renewed trade war concerns also contributed to a sharp pullback by steel stocks, with the NYSE Arca Steel Index slumping by 3 percent after jumping by 2.8 percent on Thursday.
Transportation, financial, chemical, and energy stocks also moved notably lower, reflecting broad based weakness on Wall Street.
Commodity, Currency Markets
Crude oil futures are climbing $0.67 to $62.73 a barrel after plunging $1.48 to $62.06 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,335.90, down $0.20 from the previous session’s close of $1,336.10. On Friday, gold climbed $7.60.
On the currency front, the U.S. dollar is trading at 106.98 yen compared to the 106.93 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2310 compared to last Thursday $1.2281.
Asian stocks closed broadly higher on Monday as the focus turned to the upcoming earnings season in the U.S.
While trade rhetoric continued between the U.S. and China, investors looked ahead to the release of U.S. and Chinese inflation data as well as comments from the Federal Reserve, European Central Bank and the Bank of Japan for directional cues.
China’s Shanghai Composite Index rose 8.22 points or 0.3 percent to end at 3,138.33 as investors awaited Chinese President Xi Jinping’s Tuesday speech at the Boao Forum for directional cues. Hong Kong’s Hang Seng Index jumped 384.64 points or 1.3 percent to 30,229.58.
Japanese shares reversed initial losses to end higher as the dollar pushed higher against the yen and traders awaited Bank of Japan governor Haruhiko Kuroda’s speech later in the day as he starts his second term.
The Nikkei 225 Index climbed 110.74 points or 0.5 percent to 21,678.26, led by defensive shares, while the broader Topix Index closed 0.4 percent higher at 1,725.88.
Takeda Pharmaceutical rose half a percent after the company confirmed comments by Chief Executive Christophe Weber that the pharmaceutical company is considering taking full control of Irish rival Shire plc.
In economic releases, Japan posted a current account surplus of 2.076 trillion yen in February, the Ministry of Finance said on Monday, down 28.7 percent on year.
The headline figure was shy of expectations for a surplus of 2.196 trillion yen following the 607.4 billion yen surplus in January.
Australian shares reversed early losses to end modestly higher. The benchmark S&P/ASX 200 Index rose 20 points or 0.4 percent to 5,808.70, while the broader All Ordinaries Index ended up 17.80 points or 0.3 percent at 5,904.70.
Banks ended mixed, with ANZ, Commonwealth and Westpac rising between 0.1 percent and 0.2 percent, while NAB shed 0.2 percent. Miners also turned in a mixed performance. BHP Billiton inched up marginally and Rio Tinto gained 0.3 percent while Fortescue Metals Group lost about 1 percent.
Woodside Petroleum and Origin Energy ended down about 1 percent as oil prices rebounded in Asian trading after falling about 2 percent on Friday. Macquarie Atlas Roads jumped 4.6 percent after unveiling a new name.
European stocks are turning in a mixed performance on Monday, with more talk of North Korean willingness to discuss denuclearization and hopes for strong earnings helping underpin investor sentiment.
While trade worries persist, traders seemed to have shrugged off the latest U.S. sanctions on Russia and President Donald Trump’s warning Sunday that Syrian President Bashar al-Assad and his two biggest allies could pay a “big price” for a suspected chemical-weapons attack on a rebel-held town.
The U.K.’s FTSE 100 Index is down by 0.2 percent, while the French CAC 40 Index is just above the unchanged line and the German DAX Index is up by 0.2 percent.
Swiss pharmaceutical firm Novartis has moved to the upside after the company announced an agreement to acquire U.S.-based clinical stage gene therapy company AveXis, Inc. for a total of $8.7 billion in cash.
Portuguese energy and utility group EDP has also rallied on buzz that French rival Engie was examining a possible bid for the company.
Rolls-Royce shares has jumped after the engine maker is selling its German-based diesel parts maker L’Orange to U.S.-based engineering company Woodward Inc for 700 million euros.
Meanwhile, pump maker Sulzer and technology group Oerlikon have come under pressure after their majority holder Viktor Vekselberg was included in the U.S.’ latest round of sanctions against Russia.
U.S. Economic Reports
The economic calendar for the week starts off slow, although reports on producer and consumer price inflation, import and export prices, and consumer sentiment may attract attention in the coming days.
Traders are also likely to keep an eye on the release of the minutes of the latest Federal Reserve meeting on Wednesday, looking for clues about the outlook for interest rates.
by RTTNews Staff Writer
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