BANGKOK (AP) — World shares slipped Thursday, tracking losses overnight on Wall Street, where investors sold industrial stocks following reports that the Trump administration is considering a higher tax rate on Chinese imports.
KEEPING SCORE: Germany’s DAX fell 1 percent to 12,604.39 and the CAC 40 in France lost 0.3 percent to 5,483.38. Britain’s FTSE 100 slid 0.6 percent to 7,604.58. The outlook for Wall Street was downbeat, with the Dow future contract down 0.3 percent to 25,208.00 and S&P 500 contract also losing 0.3 percent, to 2,802.70.
ASIA’S DAY: Japan’s Nikkei 225 index sank 1.0 percent to 22,512.53 while the Shanghai Composite index lost 2.0 percent to 2,768.02. Hong Kong’s Hang Seng index dropped 2.2 percent to 27,714.38 and the Kospi in South Korea shed 1.6 percent to 2,270.20. Australia’s S&P ASX 200 skidded 0.6 percent to 6,240.90. Shares also fell in Southeast Asia and Taiwan.
APPLE RECORD: Already the most valuable company in the U.S., Apple was the biggest gainer of any S&P 500 stock Wednesday, surging 5.9 percent to $201.50. That gave the company a value of $973 billion, based on its latest quarterly filing. The tech giant said the average selling price for the iPhone jumped 20 percent in its latest quarter and its third-quarter profit and sales both surpassed analyst projections. Apple’s third fiscal quarter is usually its weakest.
ANALYST’S VIEWPOINT: “U.S. futures are trading lower as investors weighing the new threats from Donald Trump,” Naeem Aslam of thinkmarkets said in a commentary, adding that “the trade tensions are making investors risk-averse today while investors digest the Fed’s interest rate decision.”
FED TALK: As expected, the Federal Reserve left interest rates unchanged, but hinted it’s likely to raise rates again in September. High-dividend stocks like consumer products makers sank as bond yields increased. The central bank noted the labor market continues to improve and the economy is growing at a strong clip, while inflation has reached its target of 2 percent a year.
ENERGY: Benchmark U.S. crude lost 1 cent at $67.65 per barrel in electronic trading on the New York Mercantile Exchange. It dropped 2 percent to $67.66 per barrel in New York. Brent crude, used to price international oils, gained 9 cents to $72.48 per barrel in London.
CURRENCY: The dollar fell to 111.62 yen from 111.72 yen. The euro slipped to $1.1624 from $1.1659.
Investing.com – Here are the top five things you need to know in financial markets on Thursday, August 2:
1. Global Markets Slide On Fresh Trade Worries
Global stocks were on the backfoot, as U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25% tariff on $200 billion worth of Chinese imports.
U.S. Trade Representative Robert Lighthizer said on Wednesday Trump directed the increase from a previously proposed 10% duty because China has refused to meet U.S. demands and has imposed retaliatory tariffs on U.S. goods.
China responded by saying that “blackmail” would not work and that it would hit back if the U.S. takes further steps hindering trade, including applying the higher tariff rate.
Trade-war fears have been simmering for months, keeping market gains in check as investors fret over the impact of tariffs on the global economy.
European stocks were similarly affected, as all of the region’s major bourses slid lower, with nearly every sector in the red.
The negative sentiment looked set to carry over to Wall Street.
The blue-chip Dow futures were down 120 points, or around 0.5%, at 5:15AM ET, the S&P 500 futures shed 13 points, or around 0.5%, while the tech-heavy Nasdaq 100 futures indicated a loss of 40 points, or roughly 0.6%.
2. Dollar Stands Tall After Upbeat Fed
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.3% to 94.75, its best level since July 20.
The Fed kept interest rates unchanged as widely expected at the conclusion of its policy meeting on Wednesday, and said U.S. economic growth has been rising strongly and the job market has continued to strengthen.
The U.S. central bank’s upbeat assessment kept it on track to lift borrowing costs at its next meeting in September.
In the bond market, U.S. Treasury prices edged higher, pushing yields lower across the curve, as investors worried about a further escalation in the Sino-U.S. trade dispute.
On the data front, the weekly report on initial jobless claims will be main event.
3. CBS Results Highlight Another Busy Earnings Day
CBS CEO Les Moonves remains under intense scrutiny after reports last week that he sexually harassed six employees in incidents dating back to the 1980s.
Fox Business’ Charlie Gasparino tweeted earlier this week that Moonves will be on the company’s earnings call and ready to answer questions.
Other members of the S&P 500 set to report earnings on Thursday include DowDuPont (NYSE:DWDP), Teva Pharma (NYSE:TEVA), Wayfair (NYSE:W), Blue Apron (NYSE:APRN), MGM Resorts (NYSE:MGM), Aetna (NYSE:AET), Cognizant (NASDAQ:CTSH), Cigna (NYSE:CI) and Yum! Brands (NYSE:YUM), all due ahead of the opening bell.
4. Tesla Shines In Pre-Market
Tesla (NASDAQ:TSLA) shares surged in pre-market trading, as its chief executive, Elon Musk, appeared to restore investor confidence with an apologetic and restrained performance on the company’s post-earnings conference call.
The outspoken Musk, who told analysts last quarter that he refused to answer their “boring” questions, apologized multiple times last night for his past behavior and sounded upbeat on the company’s future.
Musk said on the call that he expected the company to be henceforth profitable and cash flow positive, excluding some debt repayment, and had no plans for an equity raise.
The electric automaker reported $4 billion in revenue for the quarter, beating Wall Street estimates of $3.92 billion. Despite the revenue beat, the company posted a larger-than-expected earnings per share loss of $3.06 for the quarter.
The company also said that it expects production of its Model 3 – Tesla’s lowest-priced model and the key to its plans to become a mass-market automaker – to reach between 50,000 and 55,000 units in its third quarter.
Tesla shares were up 8.1% to $325.20, putting it on track to retake the title of most valuable U.S. automaker from General Motors (NYSE:GM).
5. Bank of England Rate Announcement
The Bank of England looks set to raise interest rates to their highest level since the global financial crisis almost a decade ago, despite a weakening outlook for the UK economy and deepening uncertainty over Brexit.
If all goes as scripted, the British central bank will nudge rates up to 0.75%, going beyond last November’s increase back up to 0.5%.
A decision is due at 1100GMT (7:00AM ET). Governor Mark Carney will hold a news conference to discuss at 1130 GMT.
With expectations of a rate hike almost entirely priced into the market, investors are mostly focused on what message the Monetary Policy Committee sends about its intentions for further increases in borrowing costs.
Economists mostly expect a 7-2 vote by the MPC in favor of a rate hike on Thursday. A bigger or smaller majority for an increase could be seen as a sign that the committee is more or less likely to move again soon on rates.
Similarly, the BoE’s new inflation forecasts will be watched as a sign of whether it thinks investors are being too relaxed by betting on no follow-up rate hike until late 2019 and only one more almost at the end of its three-year forecast period.
The pound sat near a two-week low ahead of the BoE’s monetary policy decision, with GBP/USD at 1.3075.