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U.S. Stocks May Come Under Pressure On Lingering Trade Concerns

wallstreet sept05 22may19 lt

Renewed trade war concerns may weigh on Wall Street in early trading on Wednesday following the notable upward move seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 100 points.

Stocks are likely to move back to the downside as traders continue to worry the trade dispute between the U.S. and China is escalating into a full-fledged trade war.

A report from the South China Morning Post said Chinas is re-examining the entire bilateral economic relationship between the U.S. and China.

The SCMP said Chinese government advisers are highlighting the risk of sourcing critical supplies from an increasingly hostile U.S. following the Trump administration's recent move to blacklist Chinese tech giant Huawei.

Mei Xinyu, a fellow at the research institute under China's Ministry of Commerce, told the SCMP that Beijing should prepare for the worst-case scenario to defend its rights in climbing up the global value chain through technological catch-up.

"Even if a deal is reached, it could be torn apart [by President Donald Trump] easily at any time," Mei said, comparing the current trade talk deadlock to the Panmunjom peace talks during the Korean War.

Potentially adding to the trade concerns, Treasury Secretary Steven Mnuchin recently told CNBC's Ylan Mui the U.S. has no plans to go to Beijing to resume trade negotiations.

Later in the session, trading may be impacted by reaction to the release of the minutes of the latest Federal Reserve meeting.

The minutes may shed additional light on the outlook for interest rates but could also be viewed as old news considering the constantly shifting developments on the trade front.

Among individual stocks, shares of Qualcomm (QCOM) are moving sharply lower in pre-market trading after a federal judge ruled the communications chip maker violated antitrust law, suppressing competition and using its dominant position to exact excessive licensing fees.

Home improvement retailer Lowe's (LOW) is also likely to come under pressure after reporting weaker than expected fiscal first quarter earnings and lower its full-year profit forecast.

On the other hand, shares of Target (TGT) are moving significantly higher in pre-market trading after the retail giant reported better than expected first quarter results.

With the markets continuing to show intense sensitivity to trade-related news, stocks showed a strong move back to the upside during the trading day on Tuesday after moving mostly lower over the course of Monday's session.

The major averages ended the day firmly in positive territory. The Dow climbed 197.43 points or 0.8 percent to 25,877.33, the Nasdaq jumped 83.35 points or 1.1 percent to 7,785.72 and the S&P 500 advanced 24.13 points or 0.9 percent to 2,864.36.

In overseas trading, stock markets across the Asia-Pacific region closed mixed for the fifth consecutive session on Wednesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index fell by 0.5 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index is just above the unchanged line, the German DAX Index and the French CAC 40 Index are down by 0.4 percent and 0.5 percent, respectively.

In commodities trading, crude oil futures are tumbling $0.86 to $62.27 a barrel after edging down $0.08 to $63.13 a barrel on Tuesday. Meanwhile, after falling $4.10 to $1,273.20 an ounce in the previous session, gold futures are rising $3.40 to $1,276.60 an ounce.

On the currency front, the U.S. dollar is trading at 110.34 yen compared to the 110.50 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1170 compared to yesterday's $1.1161.

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