The latest twist in the US-China trade war has hit tech sector
by Todd White
U.S. equity futures drifted and European stocks edged higher after a mixed session in Asia as investors digested the latest in the Sino-American confrontation over technology. Oil declined and the dollar and Treasuries were steady before the latest Fed minutes.
The Stoxx Europe 600 reversed earlier losses as technology and personal-goods shares advanced. Contracts on the Nasdaq 100 and Dow Jones Industrial Average were steady, after earlier declining with Chinese equities after the White House was reported to be considering blacklisting China’s video-surveillance firms. Qualcomm tumbled in premarket trading after a report said it received an unfavorable antitrust ruling.
Stock and bond markets are fluctuating as investors try to size up how much damage the trade war will bring to global economic growth and supply chains, while the Trump administration considers adding video equipment to its growing blacklist of sales to China. With traders in wait-and-see mode, the Cboe volatility index has been retreating and on Tuesday touched its lowest level in almost three weeks.
Next up are the minutes from the most recent Federal Reserve policy meeting. The central bank may have “slightly overdone it” by raising interest rates in December, though it’s premature to talk about a rate cut, St. Louis Fed President James Bullard said in a Bloomberg interview.
“There is a broad expectation for a growth slowdown and the trade tensions are really adding to these kinds of worries,” Jingyi Pan, Singapore-based market strategist at IG Ltd., told Bloomberg TV. “A lot of this may not have followed through to the economic data.”
Elsewhere, the pound remained volatile as Minister Theresa May faced pressure to quit as prime minister within days, after she promised Parliament the chance to call a second referendum on Brexit. U.K. stocks advanced along with gilts. In Iceland, the currency dropped after the central bank cut interest rates and reversed its economic-growth projection.
Here are some notable events coming up:
The Fed minutes of its last open market committee policy meeting will be released Wednesday. Counting of votes from the Indian general elections takes place Thursday as Prime Minister Narendra Modi attempts to secure a second term. The European Parliament holds continent-wide elections May 23-26. On Thursday, the ECB publishes its account of the April monetary policy decision.
And these are the main moves in markets:
Stocks
The Stoxx Europe 600 Index rose 0.2% as of 11:32 a.m. London time. Futures on the S&P 500 Index declined less than 0.05%. The Shanghai Composite Index dipped 0.5%. The MSCI Emerging Market Index climbed 0.3%.
Currencies
The Bloomberg Dollar Spot Index gained less than 0.05%. The euro gained 0.1% to $1.1171. The British pound dipped 0.3% to $1.2674. The onshore yuan was steady at 6.901 per dollar.
Bonds
The yield on 10-year Treasuries was unchanged at 2.43%. The yield on two-year Treasuries decreased one basis point to 2.25%. Germany’s 10-year yield fell less than one basis point to -0.07%. Japan’s 10-year yield decreased one basis point to -0.056%.
Commodities
West Texas Intermediate crude declined 0.9% to $62.55 a barrel, the lowest in a week. Iron ore climbed 2.4% to $98.50 per metric ton on its sixth consecutive advance. Sugar rose 1.2% to $0.1195 a pound.
Copyright Bloomberg News
