TOKYO (AP) — Global stock markets fell Friday ahead of a Group of Seven summit that promises to be tense as leaders confront U.S. President Donald Trump over tariffs he is imposing. Investors will then also look to policy meetings by the European Central Bank and Federal Reserve next week.
KEEPING SCORE: Germany’s DAX was down 0.8 percent to 12,707 while France’s CAC 40 slipped 0.1 percent to 5,442. Britain’s FTSE 100 fell 0.6 percent to 7,658. U.S. shares were set to drift lower with Dow futures down 0.6 percent and S&P 500 futures down 0.5 percent.
ASIA’S DAY: Japan’s benchmark Nikkei 225 shed 0.6 percent to finish at 22,694.50. Australia’s S&P/ASX 200 edged down 0.2 percent to 6,045.20. South Korea’s Kospi lost 0.8 percent to 2,451.58. Hong Kong’s Hang Seng slipped 1.9 percent at 30,910.89, while the Shanghai Composite index shed 1.4 percent to 3,067.15.
GROUP OF SEVEN: Leaders from the Group of Seven wealthy industrialized nations are meeting in Canada, where Trump’s new tariffs are expected to be a major focus. The White House is expecting a chilly reception from Canada and western European countries. The leaders of France and Canada in particular on Thursday expressed in tough terms their disapproval of the tariffs.
RATE WATCH: The Federal Reserve is expected to raise interest rates next. That would be the second increase in rates this year, and the Fed has said it expects to raise rates three times in 2018. The ECB, meanwhile, will consider whether to rein in its massive monetary stimulus program, which has boosted growth and stocks and kept a lid on the euro.
THE QUOTE: “There’s a high level of circumspection associated with this weekend’s G-7 meeting as President Trump prepares to enter the G-7 lion’s den,” says Stephen Innes, head of trading at Oanda. “Then there’s that small matter of the European Central Bank and Federal Reserve Board meetings, which could be very crucial for the markets next tack.”
ENERGY: Benchmark U.S. crude dipped 35 cents $65.60 a barrel. It rose 1.9 percent to $65.95 per barrel in New York Thursday. Brent crude, used to price international oils, fell 65 cents to $76.67 per barrel in London.
CURRENCIES: The dollar fell to 109.26 yen from 109.97 yen late Thursday in Asia. The euro slipped to $1.1739 from $1.1817.
Investing.com – Here are the top five things you need to know in financial markets on Friday, June 8:
1. G7 on watch to gauge continuing trade tensions
Market participants will focus on the G7 summit which kicks off on Friday in Quebec amid broiling tensions against the U.S. from its Group of Seven allies.
France and Germany warned the U.S. that they would not sign a joint statement without concessions, but the American top economic adviser Larry Kudlow warned this week that U.S. President DonaldTrump would not back down from his tough stance on trade.
“The American President may not mind being isolated, but neither do we mind signing a 6 country agreement if need be,” French President Emmanuel Macron shot back.
Trump showed no signs of conciliation late Thursday when he accused France and Canada of “charging the U.S. massive tariffs and create non-monetary barriers”
Trump also said he was “looking forward” to his one-on-one meetings with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron on the sidelines of the summit.
German economy minister Peter Altmaier called on Friday for Europe to remain unified in the face of rising trade tensions with the U.S., saying it was unclear how a summit of the Group of Seven rich nations would end.
“We have a serious situation, not just since last night or this morning, but rather the entire last few weeks,” Altmaier told broadcaster ZDF.
2. Global stocks head lower over trade concerns
U.S. futures pointed to a lower open on Wall Street as investors turned cautious ahead of trade tensions expected at the G7 summit. At 5:53AM ET (9:53GMT), the blue-chip Dow futures fell 162 points, or 0.64%, S&P 500 futures lost 17 points, or 0.60%, while the Nasdaq 100 futures traded down 75 points, or 1.05%.
Elsewhere, European bourses reflected the receding risk appetite, moving lower in midday trade. At 5:54AM ET (9:54GMT), the pan-European Euro Stoxx 50 fell 0.9%, Germany’s Dax slid 1.1% while London’s FTSE 100 traded down 0.8%.
3. Dollar breaks four straight days of declines
In a session with no major economic reports, the dollar rebounded on Friday, moving higher after four consecutive sessions in the red. At 5:55AM ET (9:55GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.19% at 93.61.
The euro in particular has added downward pressure to the dollar after the European Central Bank’s chief economist Peter Praet said Wednesday that officials are increasingly confident that inflation is rising back towards the bank’s target and will debate whether to begin gradually scaling back its asset purchase program at its policy meeting next week.
Investors are also preparing for a widely expected U.S. interest rate hike next week, when the Federal Reserve concludes its two-day meeting June 13. With the move fully priced in by markets, traders will focus on the post-meeting press conference with Fed chief Jerome Powell and updated economic projections for indications on the current outlook for monetary policy and whether the central bank currently plans to hike a total of three or four times this year.
4. Oil heads lower with eyes on U.S. production
Oil traded lower on Friday while investors waited for the weekly installment of drilling activity from Baker Hughes on Friday. The report will provide investors with fresh insight into U.S. oil production and demand as investors continue to fret the rapid pace of U.S. output.
Data in prior week showed that U.S. drillers added two oil rigs in the week to June 1, bringing the total count to 861, the highest level since March 2015.
U.S. oil output jumped to a record 10.8 million bpd, the Energy Information Administration said Wednesday.
5. U.S.-China trade deficit jumps to $24.6 billion
China maintained solid export growth of 12.6% in May, slightly slower than in April, but still providing good news for Beijing’s policymakers as they deal with tough trade negotiations with Washington.
The trade data released on Friday also showed that imports to the world’s second largest economy also rose more than anticipated in May and at the fastest pace since January.
However, China’s trade surplus with the U.S. rose 11.7% to $24.6 billion and the figure may reinforce Trump’s resolve to impose new tariffs against China as early as next week.