Stock-index futures waver as trade worries hang over market

Stock-index futures waver as trade worries hang over market

Trump says tariffs could go up ‘substantially’

U.S. stock-index futures traded mixed Tuesday, pointing to a flat start as investors returned from a long holiday weekend and continued to eye trade tensions between the U.S. and China.

How are the major benchmarks faring?

Futures on the Dow Jones Industrial Average YMM19, +0.13%  were up 25 points, or 0.1%, at 25,605, while S&P 500 futures ESM19, +0.04%  declined less than a point, to 2,831. Nasdaq-100 futures NQM19, +0.21%  rose 12 points, or 0.2%, to trade at 7,327.25.

U.S. financial markets were closed Monday for Memorial Day. Stocks ended higher Friday but booked losses for the week, extending the Dow’s DJIA, +0.37% weekly losing streak to five, its longest since June 2011. The Dow saw a 0.7% weekly fall, while the S&P 500 SPX, +0.14%  saw a 1.2% retreat and the Nasdaq Composite COMP, +0.11%  gave up 2.3%.

What’s driving the market?

The major indexes remain solidly higher for the year to date but have retreated significantly in May as U.S.-China trade tensions heated up. Washington and Beijing have engaged in a round of tit-for-tat tariff escalations, while the Trump administration has moved to blacklist exports to Chinese technology firm Huawei, prompting threats of further retaliation by China.

President Donald Trump, speaking at a joint news conference Monday in Tokyo with Japanese Prime Minister Shinzo Abe, said the U.S. wasn’t ready to make a trade deal with China.

“They (China) would like to make a deal. We’re not ready to make a deal,” Trump said, according to Bloomberg. He added that tariffs on Chinese products could go up “very substantially.”

Deal news was also in focus after Fiat Chrysler Automobiles NV FCAU, +8.09% unveiled a merger proposal Monday that would combine the company with French rival Renault SA RNO, +1.70% creating the world’s third-largest auto maker by production. U.S.-traded shares of Fiat were up 8.5% in premarket action.

Worries about Italy were back on the radar for European investors after the country’s euroskeptic party fared well in European Parliament elections over the weekend. Italian banks fell, contributing to a weaker tone across European markets.

What are analysts saying?

“We’ve been with a short-term negative trading bias since ‘The Tweet’ of a few Sundays ago, and that kick in the pants has yet to produce anything for bulls to again celebrate,” said Rick Bensignor of Bensignor Investment Strategies, in a note, referring to Trump’s May 5 tweet threatening to raise tariffs on $200 billion of Chinese goods from 10% to 25% — a threat that was later carried out.

Since then, the S&P 500 “has been rangebound, and hasn’t been able to progress back above 2890 nor break to new lows beneath 2801,” Bensignor said.

Which stocks are worth watching?

Global Payments Inc. GPN, -2.44% and Total Systems Services Inc. TSS, +4.69%announced an all-stock merger of equals Tuesday, valued at $21.5 billion. The transaction values Total Systems Services at $119.86, or a roughly 20% premium from Friday’s closing price. Shares of Global Payments fell 4.2% in premarket trade, while Total Systems shares rose 2.3% to $116.

Shares of Alibaba Group Holding Ltd. BABA, +1.21% could be in focus Tuesday, after reports Monday that the Chinese e-commerce giant is planning to raise as much as $20 billion through a listing of public shares in Hong Kong. The stock rose 1.1% in premarket trade.

What economic data are in focus?

The economic calendar is light Tuesday, featuring only the March reading of the Case-Shiller home-price index due at 9 a.m. Eastern, and the Conference Board’s May reading on consumer confidence at 10 a.m.

How are other markets trading?

Stocks in Asia closed mostly higher on Tuesday, with Japan’s Nikkei 225NIK, +0.37% rising 0.4%, Hong Kong’s Hang Seng Index HSI, +0.38% adding 0.5% and China’s Shanghai Composite Index SHCOMP, +0.61% advancing 0.4%. In Europe SXXP, +0.13% stocks were trading mostly lower.

In commodities markets, the price of crude oil CLN19, +0.90% was on the rise, while gold GCN19, -0.54% was virtually unchanged. The U.S. dollar DXY, +0.20%meanwhile, ticked higher relative to its peers.

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