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Lingering Trade War Concerns May Weigh On Wall Street

The major U.S. index futures are pointing to a lower opening on Monday, with stocks likely to move back to the downside after ending last Friday's trading mostly higher.

Continued concerns about a global trade war are likely to weigh on the markets after a report from the Wall Street Journal said President Donald Trump plans to ban many Chinese companies from investing in U.S. technology firms and block additional technology exports to Beijing.

Trump also continued his harsh rhetoric on trade in a post on Twitter on Sunday, urging countries to remove "artificial" trade barriers on tariffs on U.S. goods.

"The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!" Trump tweeted.

Stocks moved mostly higher during trading on Friday, although the tech-heavy Nasdaq ended the day modestly below the unchanged line. The advance by the Dow allowed the blue chip index to avoid its longest losing streak in over forty years.

The major averages finished the session mixed. The Nasdaq dipped 20.14 points or 0.3 percent to 7,692.82, while the Dow climbed 119.19 points or 0.5 percent to 24,580.89 and the S&P 500 rose 5.13 points or 0.2 percent to 2,754.89.

Despite the mixed performance on the day, the major averages all moved lower for the week. While the Dow slumped by 2 percent, the Nasdaq and the S&P 500 slid by 0.7 percent and 0.9 percent, respectively.

A rally by energy stocks contributed to the strength on Wall Street, as the price of crude oil spiked higher on news out of the closely watched OPEC meeting in Vienna, Austria.

Reports earlier in the day indicated OPEC planned to increase oil production by about 1 million barrels per day, although a statement from the cartel did not provide a specific figure.

OPEC only noted that it was overshooting the output reduction target put in place in November of 2016 and said it will "strive to adhere to the overall conformity level of OPEC-12, down to 100%."

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 3.6 percent, the NYSE Arca Oil Index surged up by 2.6 percent and the NYSE Arca Natural Gas Index jumped by 2 percent.

Steel stocks also saw considerable strength on the day, driving the NYSE Arca Steel Index up by 2.1 percent. The index bounced off its lowest closing level in over two months.

Chemical and gold stocks also showed strong moves to the upside, while weakness was visible among banking and semiconductor stocks.

Traders largely shrugged off lingering trade concerns even as President Donald Trump threatened to impose a 20 percent tariff on all cars imported to the U.S. from the European Union.

Trump claimed in a post on Twitter that he would impose the new tariffs unless the EU removes tariffs and trade barriers placed on the U.S.

"Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!" Trump tweeted.

The latest tweet from Trump came after he threatened to escalate the ongoing trade dispute with China earlier this week.

Commodity, Currency Markets

Crude oil futures are rising $0.44 to $69.02 a barrel after spiking $3.04 to $68.58 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,271, up $0.30 from the previous session's close of $1,270.70. On Friday, gold inched up $0.20.

On the currency front, the U.S. dollar is trading at 109.59 yen compared to the 109.97 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1692 compared to last Friday's $1.1651.

Asia

Asian stocks closed mostly lower on Monday as trade worries persisted and oil prices gave up some of their hefty gains made on Friday after OPEC pledged to increase production by less than the market feared.

China's Shanghai Composite Index fell 29.99 points or 1 percent to 2,859.77, as news of a cut in the reserve requirement ratio for some banks was offset by lingering trade war fears. Hong Kong's Hang Seng Index tumbled 377.31 points or 1.3 percent to 28,961.39.

The Wall Street Journal reported that U.S. President Donald Trump plans to bar Chinese companies from investing in U.S. technology firms and block additional technology exports to Beijing.

Japanese shares fell as the yen firmed up in reaction to reports suggesting that the Trump administration plans to put curbs on Chinese investment in U.S. technology firms. The Nikkei 225 Index dropped 178.68 points or 0.8 percent to 22,338.15, while the broader Topix index closed 1 percent lower at 1,728.27.

Large cap stocks fell, with Fast Retailing losing 1 percent and SoftBank ending down 2.4 percent. Sharp Corp slumped 5.1 percent on equity dilution worries.

Australian shares fell modestly, dragged down by banks after Commonwealth Bank unveiled plans to spin off its wealth management and mortgage broking business.

The benchmark S&P/ASX 200 Index dipped 14.80 points or 0.2 percent to 6,210.40, while the broader All Ordinaries Index ended down 13.40 points or 0.2 percent at 6,308.70.

Commonwealth Bank lost 2.3 percent after announcing radical restructuring plans. The other three big banks fell between 0.6 percent and 1.1 percent.

Meanwhile, higher commodity prices helped lift mining and energy stocks, with BHP Billiton, Fortescue Metals Group, Rio Tinto, Woodside Petroleum, Santos, Oil Search and Origin Energy rising 1-2 percent.

Gold miner Evolution Mining gained 0.9 percent and Newcrest Mining added 0.8 percent as gold prices rose on dollar weakness. Metcash rallied 2.2 percent after announcing a A$125 million share buyback.

Europe

European stocks have fallen sharply on Monday as trade war fears showed no sign of abating.

U.S. President Donald Trump on Sunday issued new threats against America's trade partners, calling on all the countries to remove trade barriers and tariffs and raising concerns about potential escalation of the trade battle between the U.S. and the rest of the world.

In another development, the Wall Street Journal reported that Trump plans to bar many Chinese companies from investing in U.S. technology firms and block additional technology exports to China.

There was also some disappointment on the data front as survey data from Ifo Institute revealed that German business sentiment weakened in June. The business confidence index fell to 101.8, in line with expectations. The initially estimated score for May was 102.

While the French CAC 40 Index has fallen by 0.9 percent, the German DAX Index and the U.K.'s FTSE 100 Index are both down by 1.5 percent.

ING Group NV shares have dropped after the Dutch banking firm said it is the subject of criminal investigations by Dutch authorities regarding various requirements related to client on-boarding, money laundering and corrupt practices.

French catering and food service firm Elior Group has also moved to the downside. The company appointed Oscar Vela as the new Chief Executive Officer for its concession catering activities worldwide.

Old Mutual shares have been suspended after the British financial services firm announced the pricing of Quilter's IPO at 145 pence per ordinary share.

On the other hand, office provider IWG has jumped after the company said it is evaluating a possible cash offer for the company from private equity firm Terra Firma Investments.

Premier Foods has also rallied. The second-biggest shareholder in the company has called for the removal of Chief Executive Gavin Darby.

U.S. Economic Reports

At 10 am ET, the Commerce Department is scheduled to release its report on new home sales in the month of May. New home sales are expected to climb by 1.5 percent in May after pulling back by 1.5 percent in April.

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