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Renewed Trade War Concerns May Lead To Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower opening on Friday, with stocks likely to give back ground after moving sharply higher over the course of the previous session.

Renewed concerns about the U.S.-China trade war may weigh on the markets after a report from Bloomberg said President Donald Trump's administration is holding off on decisions about licenses for U.S. companies to restart business with Chinese tech giant Huawei.

Trump previously said his administration would make "timely licensing decisions" but has reportedly decided to delay the decisions in response to China halting its purchases of U.S. agricultural products.

China decided to stop buying U.S. agricultural products in retaliation against Trump's announcement last week that he plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

The report may weigh on U.S. chipmakers, which require a special license to sell goods to Huawei after the company was added to a U.S. trade blacklist in May over national security concerns.

Following the recovery from an early sell-off on Wednesday, stocks extended the upward move with a substantial rally during trading on Thursday. With the jump on the day, the Nasdaq and the S&P 500 more than offset Monday's steep losses.

The major averages saw further upside in late-day trading, closing just off their highs of the session. The Dow surged up 371.12 points or 1.4 percent to 26,378.19, the Nasdaq soared 176.33 points or 2.2 percent to 8,039.16 and the S&P 500 spiked 54.11 points or 1.9 percent to 2,938.09.

The rally on Wall Street partly reflected a positive reaction to a report from the Chinese customs office showing unexpected annual growth in Chinese exports.

The report said Chinese exports in July were up by 3.3 percent compared to the same month a year ago, while economists had expected a 2 percent decrease.

While the report also showed a 5.6 percent year-over-year drop in Chinese imports, that was smaller than the 8.3 percent slump expected by economists.

The data eased concerns about the impact of the U.S.-China trade dispute even though it reflects a period before the latest escalation in the trade war.

Meanwhile, China's central bank set the midpoint for the yuan above 7.00 per dollar the first time in a decade, but it was not as weak as many had expected.

The news out of China contributed to a rebound by U.S. treasury yields, as some traders moved money out of the safe haven of bonds.

On the U.S. economic front, the Labor Department released a report unexpectedly showing a modest decrease in first-time claims for unemployment benefits in the week ended August 3rd.

The report said initial jobless claims dipped to 209,000, a decrease of 8,000 from the previous week's revised level of 217,000.

Economists had expected jobless claims to come in unchanged compared to the 215,000 originally reported for the previous week.

Software stocks moved sharply higher over the course of the trading session, driving the Dow Jones U.S. Software Index up by 2.9 percent. The index continued to recover after ending Monday's trading at a two-month closing low.

Significant strength was also visible among semiconductor stocks, as reflected by the 2.7 percent jump by the Philadelphia Semiconductor Index.

Advanced Micro Devices (AMD) posted a standout gain after launching its second generation server chip with Google and Twitter as customers.

Energy, biotechnology, and chemical stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are climbing $0.62 to $53.16 a barrel after jumping $1.45 to $52.54 a barrel on Thursday. Meanwhile, after slumping $10.10 to $1,509.50 an ounce in the previous session, gold futures are inching up $0.50 to $1,510 an ounce.

On the currency front, the U.S. dollar is trading at 105.74 yen versus the 106.07 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1203 compared to yesterday's $1.1180.

Asia

Asian stocks ended mixed on Friday as trade worries persisted and investors digested key data from China and Japan.

The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co., Bloomberg reported after Chinese companies halted purchases of U.S. agricultural products.

Chinese shares fell after the release of mixed inflation data. The benchmark Shanghai Composite Index ended down 19.80 points or 0.1 percent at 2,774.75.

Consumer prices in China rose an annual 2.8 percent in July, the National Bureau of Statistics said in a report. That exceeded expectations for 2.7 percent, which would have been unchanged from the June reading.

On a monthly basis, consumer prices were up 0.4 percent after easing 0.1 percent in the previous month.

The bureau also said that producer prices sank 0.3 percent year-on-year, beneath expectations for a flat reading that would have been unchanged from the previous month.

Hong Kong's Hang Seng Index slid 181.47 points or 0.7 0.69 percent to 25,939.30 as demonstrators gathered at Hong Kong's international airport to reiterate their demands for human rights and freedom and put their case "in front of an international audience."

Meanwhile, Japanese shares advanced after data showed the country's economy grew at a faster than expected pace in the second quarter.

Japan's GDP grew 0.4 percent sequentially in the second quarter of 2019, the Cabinet Office said in a report. That beat expectations for an increase of 0.1 percent following the upwardly revised 0.7 percent gain in the previous quarter.

On an annualized basis, GDP gained 1.8 percent - again exceeding expectations for an increase of 0.5 percent following the upwardly revised 2.8 percent gain in the three months prior.

The Nikkei 225 Index rose 91.47 points or 0.4 percent to 20,684.82, while the broader Topix ended up 0.4 percent at 1,503.84.

Mining, textile and apparel, and precision instrument issues led the gainers. Chip-related stocks fell on reports the Trump administration is delaying a decision on handing out licenses for U.S. companies to resume shipping to China's Huawei. Shiseido jumped 8.1 percent and Toray Industries surged 6.1 percent on solid earnings.

Australian markets eked out modest gains, led by banks and miners. The benchmark S&P/ASX 200 Index rose 16.30 points or 0.3 percent to 6,584.40, while the broader All Ordinaries index inched up 21.10 points or 0.3 percent to 6,663.40.

Lithium miners Orocobre and Pilbara Minerals soared 7-10 percent after the world's biggest lithium producer Albemarle said it would delay construction of 125,000 metric tons of additional lithium processing capacity due to a supply glut.

Nickel miner Independence Group jumped 5.3 percent as nickel prices hit a 16-month high. Mining heavyweight BHP ended little changed, while rival Rio Tinto shed 0.9 percent.

Banks ANZ, Commonwealth and Westpac rose between half a percent and 0.7 percent. Tech stocks rallied, with Wisetech climbing 2.7 percent and Afterpay Touch jumping 6.1 percent.

On the other hand, casino operator Crown Resorts declined 1.3 percent after saying it would cooperate in a probe into Melco Resorts and Entertainment's planned stake purchase in Crown.

Seoul stocks rose sharply as the Chinese yuan held steady after the release of consumer and producer inflation data. The benchmark Kospi climbed 17.14 points or 0.9 percent to 1,937.75.

YG Entertainment shares slumped 11 percent after the police launched a preliminary investigation into suspicions that the company's founder engaged in overseas gambling.

Europe

European stocks have fallen on Friday as U.S.-China trade worries resurface and Italian bonds sink amid heightened political uncertainty after Interior Minister Matteo Salvini of the right-wing League party called for fresh general elections.

U.S.-China trade tensions continue to escalate, with a Bloomberg report saying the White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co.

Meanwhile, British finance minister Sajid Javid announced he would delay a long-planned review of public spending due this year ahead of Brexit, fueling speculation that Prime Minister Boris Johnson is preparing for a snap election.

While the U.K.'s FTSE 100 Index has edged down by 0.1 percent, the French CAC 40 Index is down by 0.9 percent and the German DAX Index is down by 1.1 percent.

German energy utility Innogy has shown a notable move to the downside after reporting a decrease in first half profits. IT systems provider Bechtle has also tumbled after unveiling its second-quarter results.

On the other hand, Hikma Pharmaceuticals has soared after the company raised its full-year revenue forecasts for its generic drug business.

Shares of security contractor G4S have also jumped after its board approved plans to separate its cash solutions business.

In economic news, U.K. GDP fell 0.2 percent sequentially in the second quarter, reversing the first quarter's 0.5 percent growth, according to the first estimate from the Office of National Statistics.

On an annual basis, the economy grew at a slower pace of 1.2 percent after rising 1.8 percent in the first quarter.

French industrial production fell 2.3 percent month-on-month in June, in contrast to a 2 percent rise in May, statistical office Insee said. This was the biggest fall since January 2018 and was the first drop in three months.

German exports fell by a seasonally adjusted 0.1 percent month-on-month in June, reversing a 1.3 percent rise in May, data from Destatis revealed. The rate came in line with expectations.

Imports climbed 0.5 percent, as expected but in contrast to May's 0.3 percent decline.

U.S. Economic Reports

Largely reflecting a rebound in energy prices, the Labor Department released a report showing a modest increase in U.S. producer prices in the month of July.

The Labor Department said its producer price index for final demand rose by 0.2 percent in July after inching up by 0.1 percent in both May and June. The uptick in prices matched economist estimates.

Meanwhile, the report said core producer prices, which exclude food and energy prices, edged down by 0.1 percent in July after climbing by 0.3 percent in June.

The modest pullback in core producer prices came as a surprise to economists, who had expected core prices to rise by 0.2 percent.

Stocks In Focus

Shares of Nektar Therapeutics (NKTR) are plummeting in pre-market trading after the biopharmaceutical company reported second quarter revenues that missed analyst estimates.

Uber (UBER) is also seeing significant pre-market weakness after the ride-hailing service reported a much wider than expected second quarter loss on revenues that also came in below expectations.

On the other hand, shares of Yelp (YELP) are likely to see initial strength after the online review site operator reported second quarter results that beat estimates.

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