SYDNEY,. US and Japan equity futures dropped with Treasury yields on news that the Trump administration is preparing the biggest list yet of Chinese goods to be hit with tariff increases. The yen climbed and the Aussie and kiwi retreated.
Futures on the S&P 500 Index tumbled, ending the positive tone to equities enjoyed at the start of the week thanks to optimism about the corporate-earnings season. Treasuries rose at the end of yesterday’s session as news about the plans emerged.
The US Trade Representative office said that President Donald Trump has ordered the preparation of a proposed list of US$200 billion (RM805.5 billion) of Chinese imports for tariff hikes.
The escalating trade war between the world’s two biggest economies has hit Chinese and Asian equities harder than American ones, with the latest news setting the tone for a volatile Wednesday in Asia. The next risk is retaliation threats from China.
Investors are hoping for a bumper corporate earnings season turning, with expectations that strong results can complement a recent run of positive economic data and overshadow growth concerns stemming from trade tensions.
Elsewhere, oil steadied after an industry report was said to show shrinking US crude stockpiles.These are some events to look out for this week:
Earnings season gets going with JPMorgan Chase & Co and Citigroup Inc among the largest companies due to give results, as well as India’s Infosys Ltd The most noteworthy US data may be the June inflation report tomorrow, which consensus expects will show both headline and core price growth picking up.
There’s another deluge of Treasury debt sales too, with a total US$156 billion of notes and bills offered.
Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.
Here are the main market moves:
Futures on the S&P 500 fell 0.8 per cent. The underlying gauge earlier closed 0.4 per cent higher yesterday. Futures on Japan’s Nikkei 225 dropped 0.7 per cent.
The Japanese yen rose 110.86 per dollar, compared with 111.27 before the tariff report came out. The euro fell 0.1 per cent to US$1.1735. The Aussie was down 0.5 per cent at 74.23 US cents.
The yield on 10-year Treasuries slipped one basis point to 2.85 per cent Tuesday.
West Texas Intermediate crude was flat at US$74.04 a barrel. Gold was little changed at US$1,254.75 an ounce.