The Tuesday Market Minute
- Global markets mixed as tech stocks continue to lead bourses lower following last week's sell-off.
- Tesla slumps more than 15% after the S&P 500 declines to add the clean-energy carmaker into the S&P 500.
- President Donald Trump vows to scale-back U.S. economic ties with China as campaign rhetoric accelerates into the final two-month push.
- Oil prices slide as the dollar books solid gains and markets question the pace of the global economic recovery.
- U.S. equity futures suggest a weaker open on Wall Street, with the Nasdaq called around 450 points lower as Tesla, chip-stocks and the broader tech sector continues to sputter.
Wall Street futures edged lower Tuesday, while tech stocks extended their recent slump, as investors looked to signs of a weakening global recovery and braced for near-term volatility in advance of the U.S. Presidential election in November.
Futures contracts tied to the Nasdaq Composite index, which as gained more than 33% so far this year, are priced for a 455 point opening bell decline, paced by a steep 15% pullback for shares in Tesla (TSLA) - Get Report which was denied access to the benchmark S&P 500 late Friday.
Analysts and investors are still looking to pinpoint the catalyst for last week's tech stock slump, which loped $180 billion in market value from Apple (AAPL) - Get Report alone, while traders are looking reluctant to add to the sector until recent market volatility subsides.
Markets more broadly were also left with concerns for the fate of the global economic recovery, which continues to show signs of weakness as coronavirus infection rates accelerate in India, Brazil and the some parts of the United States. Comments from President Donald Trump at the White House yesterday, in which he vowed to significantly reduce the country's economic ties to China, also weighed on sentiment.
“Whether it’s decoupling or putting massive tariffs on China which I’ve been doing already,” Trump told reporters. “We’re going to end our reliance on China because we can’t rely on China and I don’t want them building a military like they’re building right now and they’re using our money to build it.”
While analysts have described his remarks as little more than September electioneering, they nonetheless suggest the kind of headline risk investors will need to navigate between now and November, as both Trump and his Democratic rival, Joe Biden, ramp-up their Presidential campaigns for the final two-month push.
And with U.S. tech stocks look set for another heavy session, futures contracts tied to both the Dow Jones Industrial Average and the S&P 500 suggest similar opening bell pullbacks, with the former expected to slide 240 points and the latter looking at a 55 point decline.
European stocks were also on the back foot Tuesday, and tech stocks were again the major force behind the pullback, although concerns for the fate of Britain's Brexit trade deal with the European Union also clipped gains as the two sides look increasingly unlikely to reach an agreement before their self-imposed deadline of October 15.
The Stoxx 600 benchmark, the region's broadest measure of share prices, was marked 1.6% lower in midday Tuesday trading, lead by a 1.5% decline in the trade-sensitive DAX performance index, while Britain's FTSE 100 fell 0.7% in London.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, jumped 0.6% to 93.32 in a defensive overnight session as the pound and the euro retreated amid Brexit concerns, while benchmark 10-year U.S. Treasury bond yields slipped to 0.685%.
Global oil prices were pushed lower by the dollar's gains, as well as renewed concerns for world demand following a weekend price cut from OPEC leader Saudi Arabia, which also reported the lowest August export rate to the United States in more than three decades.
WTI contracts for October delivery, the U.S. benchmark, traded $1.81 lower from their Friday close in New York at $37.27 per barrel in early European dealing while Brent contracts for November, the new global benchmark, were seen $1.65 lower at $40.36 per barrel.
Overnight in Asia, Japan's Nikkei 225 lead a mixed session for regional stocks with a 0.8% gain to close at 23,274.13 points while the MSCI ex-Japan benchmark headed into the final hours of trading with a modest 0.17% advance, paced by gains in Australia and South Korea.