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Futures Pointing To Initial Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower opening on Wednesday, with the major averages poised to add to the modest losses posted in the previous session.

Lingering trade concerns may weigh on Wall Street as traders turn their attention back to the ongoing U.S.-China trade dispute.

The U.S.-China trade conflict largely took a back seat to President Donald Trump's threatened tariffs on Mexico but may move back into the spotlight ahead of the G20 summit later this month.

In remarks to reporters on Tuesday, Trump suggested he has "no interest" in negotiating unless China agrees to come back to the table to discuss previous terms of a deal he has claimed was nearly complete.

Trump said he expects to meet with Chinese President Xi Jinping at the G20 summit and has warned that he will impose new tariffs on Chinese goods if his counterpart does not attend.

Potentially overshadowing the negative sentiment about trade, another report showing tame inflation may add to optimism about an interest rate cut by the Federal Reserve.

Stocks failed to sustain an initial move to the upside and spent the better part of Tuesday's trading showing a lack of direction. The major averages bounced back and forth across the unchanged line before closing slightly lower.

After closing higher for six consecutive sessions, the Dow slipped 14.17 points or 0.1 percent to 26,048.51. The Nasdaq edged down 0.60 points or less than a tenth of a percent to 7,822.57, while the S&P 500 dipped 1.01 points or less than a tenth of a percent to 2,885.72.

The initial strength on Wall Street partly reflected recent upward momentum, which has helped stocks bounce well off the multi-month lows set last month.

Optimism about a potential interest rate cut by the Federal Reserve has contributed to the recent rebound on Wall Street, with the central bank due to make its latest monetary policy decision next week.

The Fed is widely expected to leave interest rates unchanged next week, although the chances for a rate cut next month have spiked since Fed Chairman Jerome Powell pledged to act "as appropriate" to support the economic expansion.

Buying interest waned shortly after the start of trading, however, inspiring some traders to cash in on the recent strength in the markets.

The choppy trading seen thereafter came as traders await further developments regarding the ongoing trade dispute between the U.S. and China.

On the U.S. economic front, the Labor Department said its producer price index for final demand inched up by 0.2 percent in May after rising by 0.2 percent in April. The uptick in prices matched economist estimates.

Excluding food and energy prices, core producer prices rose by 0.2 percent in May after edging up by 0.1 percent in the previous month. The increase in core prices also met expectations.

The report also said the annual rate of growth in producer prices slowed to 1.8 percent from 2.2 percent in April, coming in below estimates for an increase of 2.0 percent.

The annual rate of core producer price growth also dipped to 2.3 percent in May from 2.4 percent in April, matching expectations.

Most of the major sectors ended the day showing only modest moves, although substantial strength remained visible among steel stocks. The NYSE Arca Steel Index surged up by 3.1 percent, ending the session at its best closing level in a month.

The rally by steel stocks came amid optimism about Chinese demand following news Beijing will allow local governments to use proceeds from special bonds as capital for major infrastructure projects.

Oil service stocks also turned in a strong performance on the day, as reflected by the 1.3 percent gain posted by the Philadelphia Oil Service Index.

On the other hand, housing stocks came under pressure over the course of the trading session, dragging the Philadelphia Housing Sector Index down by 1.1 percent.

Commodity, Currency Markets

Crude oil futures are tumbling $1.40 to $51.87 a barrel after inching up $0.01 to $53.27 a barrel on Tuesday. Meanwhile, after rising $1.90 to $1,331.20 an ounce in the previous session, gold futures are climbing $6.20 to $1,337.40 an ounce.

On the currency front, the U.S. dollar is trading at 108.37 yen compared to the 108.52 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1317 compared to yesterday's $1.1326.

Asia

Asian stocks ended lower on Wednesday amid lingering uncertainty surrounding U.S.-China trade friction after U.S. President Donald Trump said that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five "major points" that he did not specify.

Chinese shares fell after the release of weak factory inflation data and amid concerns over an escalation of the U.S.-China trade war. The benchmark Shanghai Composite Index ended down 16.34 points or 0.6 percent at 2,909.38.

China's consumer price inflation accelerated amid higher food prices in May, while factory gate inflation slowed on weak commodity demand, data from National Bureau of Statistics showed.

Consumer prices advanced 2.7 percent year-on-year in May after gaining 2.5 percent in April. The rate was the fastest in more than a year and came in line with expectations.

On the other hand, producer price inflation eased to 0.6 percent in May from 0.9 percent in April, as expected. The decrease was largely due to a drop in manufactured industrial input prices.

Hong Kong's Hang Seng Index plunged 480.88 points or 1.7 percent to 27,308.46 as thousands continued to protest against a controversial China extradition bill.

Japanese shares declined and the yen rose slightly against the dollar as investors fretted about a worsening U.S.-China relationship. Investors ignored data showing an unexpected increase in Japan's core machinery orders in April.

The total value of core machine orders in Japan jumped a seasonally adjusted 5.2 percent sequentially in April - standing at 913.7 billion yen. That beat forecasts for a drop of 0.8 percent following the 3.8 percent gain in March.

The Nikkei 225 Index dropped 74.56 points or 0.4 percent to 21,129.72, while the broader Topix closed 0.5 percent lower at 1,554.22.

SoftBank Group shares fell 2.4 percent after a group of U.S. state governments filed a lawsuit to block the proposed merger of T-Mobile US and Sprint. Gaming giant Nintendo tumbled 3.5 percent after postponing the release of a popular game.

Australian markets gave up early gains to end roughly flat. The S&P/ASX 200 Index ended marginally lower at 6,543.70, snapping a five-session winning streak. The broader All Ordinaries Index edged up 4.50 points to 6,628.90.

Miners BHP, Rio Tinto and Fortescue Metals Group climbed 2-6 percent as copper prices hit their highest level in two weeks on news that local governments in China will have more room to spend on infrastructure in a bid shore up the slowing economy.

Gold miners Evolution, Northern Star and Newcrest rallied 2-3 percent. Financials snapped a five-session winning streak, with the big four banks ending down between 0.8 percent and 1.4 percent.

Retailer Wesfarmers shed 0.8 percent after it agreed to buy online retailer Catch Group for $230 million, while Afterpay Touch Group soared 6.1 percent as it completed a A$317 million capital raising.

In economic news, Australian consumer confidence deteriorated in June as deepening concerns about the economy outweighed the initial boost from lower interest rates, survey data from Westpac showed. The corresponding index fell to 100.7 from 101.3 in May.

Seoul stocks snapped a four-day winning streak amid ongoing uncertainty around U.S.-China trade talks. The benchmark Kospi ended a choppy session down by 3.06 points or 0.1 percent at 2,108.75.

Europe

European shares are pulling back from three-week highs on Wednesday as trade worries and concerns about slowing growth return to haunt investors.

Trade tensions intensified after U.S. President Donald Trump said that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five "major points," which he did not specify.

Elsewhere, a measure of China's factory gate inflation slowed in May on weak commodity demand, reinforcing worries about cooling growth in the world's second largest economy.

Investors were also reacting to Trump's comments that U.S. interest rates are "way too high." Trump said that the U.S. has low inflation and the officials of the Federal Reserve "don't have a clue" on rates.

While the German DAX Index has dropped by 0.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 0.7 percent.

Banks are moving lower on the day as the European Union moves closer to taking disciplinary action over Italy's growing debt.

British American Tobacco has also slumped. In a first-half trading update, the tobacco firm said it expects global industry volumes to decline 3.5 percent.

Saga Plc., a specialist in products and services for life after 50, has tumbled after the company said the process to hire a replacement for Group Chief Executive Officer Lance Batchelor has started.

Software company Dassault Systèmes has also dropped in Paris. The company has signed an agreement to acquire Medidata Solutions, Inc. (MDSO) in an all-cash transaction at a price of $ 92.25 per share.

On the other hand, Spanish retail giant Inditex Group has moved to the upside after reporting higher earnings and sales in the first quarter of 2019, driven by the ongoing digital transformation of its integrated store and online sales platform.

German digital publishing house Axel Springer has also soared. The company has announced a public takeover offer from Global investment firm Kohlberg Kravis Roberts at an offer price of 63 euros per share in cash.

U.S. Economic Reports

A closely watched report released by the Labor Department on Wednesday showed a modest increase in U.S. consumer prices in the month of May.

The Labor Department said its consumer price index inched up by 0.1 percent in May after rising by 0.3 percent in April. The uptick in prices matched economist estimates.

Excluding food and energy prices, core consumer prices also edged up by 0.1 percent for the fourth consecutive month. Economists had expected core prices to rise by 0.2 percent.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended June 7th.

Crude oil inventories are expected to edge down by 0.5 million barrels after jumping by 6.8 million barrels in the previous week.

The Treasury Department is scheduled to announce the results of its auction of $24 billion worth of ten-year notes at 1 pm ET.

Stocks In Focus

Shares of Dave & Buster's (PLAY) are moving sharply lower in pre-market trading after the restaurant chain reported weaker than expected fiscal first quarter results and lowered its full-year guidance.

Qualcomm (QCOM) may also move to the downside amid news LG Electronics and the Federal Trade Commission are opposing the chipmaker's efforts to put an antitrust decision against the company on hold while it pursues an appeal.

On the other hand, shares of Mattel (MAT) may see initial strength after rejecting a second merger offer from Bratz doll maker MGA Entertainment.

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