Thursday June 27th

27-06-2019

Dow futures turn lower as investors focus on US-China trade and Boeing’s safety concerns

U.S. stock index futures turned lower Thursday as investors looked to the two largest economies amid concerns over a protracted trade war. Around 7:10 a.m. ET, Dow futures were down 7 points after trading higher earlier in the premarket session. Chinese President Xi Jinping is expected to present President Donald Trump with the terms it expects the U.S. to meet before Beijing is willing to settle the contentious trade fight between the two nations, The Wall Street Journal reported Thursday, citing Chinese officials. The South China Morning Post, citing unnamed sources, reported overnightthat officials from Washington and Beijing had tentatively agreed to resume talks aimed at resolving the dispute. The report could not be independently verified by CNBC. Trump and Xi are expected to meet at this week’s G-20 summit in Osaka, Japan. China and the U.S. have been in a trade war for more than a year. The U.S. has imposed tariffs on more than $250 billion worth of Chinese goods. China has retaliated with tariffs on U.S. products. An agreement between Trump and Xi at the G-20 summit in Japan would avert the next round of tariffs on additional $300 billion worth of Chinese imports. On Wednesday, Trump said a bilateral meeting with his Chinese counterpart could lead to a trade deal but warned he was prepared to impose tariffs on virtually all remaining Chinese imports if talks faltered once again. Shares of Boeing also weighed on Dow futures, falling sharply after the Federal Aviation Administration said on Wednesday that it has found an issue with the 737 Max that the manufacturer must address before it lifts the national grounding order. Travelers shares fell 1.1% after an analyst at Deutsche Bank downgraded them to sell from hold, noting the company’s bottom line will take a hit in part because of tornado-related catastrophes. Futures on the S&P 500 and Nasdaq 100 traded slightly higher. On the data front, a third reading of first-quarter GDP (gross domestic product), GDP prices, and the latest weekly jobless claims figures will be released at 8:30 a.m. ET. Pending home sales for May and Kansas City Fed survey data for June will follow slightly later in the session. Markets in Asia Pacific advanced on Thursday as investors awaited the meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the G-20 summit. The Nikkei 225 rose 1.19% to close at 21,338.17, while the Topix index added 1.23% to finish its trading day at 1,553.27. Mainland Chinese shares rose on the day, with the Shanghai composite adding 0.69% to 2,996.79 and the Shenzhen component rising 1.28% to 9,239.48. The Shenzhen composite also advanced 1.092% to 1,577.56. Hong Kong’s Hang Seng index also added 1.36%, as of its final hour of trading. In South Korea, the Kospi gained 0.59% to close at 2,134.30. Oil slid to around $66 a barrel on Thursday, pressured by concerns over whether the G20 summit will produce a breakthrough on trade and perceptions that supply is ample despite the prospect of continued OPEC curbs. U.S. President Donald Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports if the two countries don’t agree. “A complete breakdown of the talks will have a negative impact on the financial markets and also on oil, but the sell-off in risky assets should be short-lived,” said Tamas Varga of oil broker PVM. “Oil bulls might have to wait until the second half of next week to start firing from all cylinders.” Brent crude, the global benchmark, was down 61 cents at $65.88 by 0840 GMT. U.S. West Texas Intermediate crude fell 35 cents to $59.03. Oil jumped by more than 2% on Wednesday after the latest U.S. petroleum supply report showed a larger-than-expected drop in crude stocks. Inventories fell 12.8 million barrels, more than the 2.5 million barrel decrease analysts had expected. Gold prices fell on Thursday as hopes of a truce in the U.S.-China trade spat ahead of a weekend meeting at the G20 summit rekindled investors’ interest in riskier assets, weighing on safe-haven bullion. The South China Morning Post, citing sources, said Washington and Beijing were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports. Spot gold was down 0.4% at $1,402.71 per ounce as of 0948 GMT, after shedding more than 1% in the previous session. U.S. gold futures slipped 0.6% to $1,406.50 an ounce.