The Friday Market Minute
- Global stocks retreat as Trump takes aim at China's handling of the coronavirus outbreak and threatens tariffs as punishment.
- Trump doesn't dismiss suggestions of withholding payment on China's Treasury bonds, but says he can get "more money" from tariffs on China-made goods.
- Amazon's Q2 profit warning, as well as a smaller-than-expected buyback announcement from Apple, underscore earnings concerns as the domestic economy falters.
- U.S. stocks post their strongest monthly gains since January 1987 in April, with the Nasdaq recording its best month since June of 2000.
- Wall Street futures suggest a weaker open ahead of earnings from ExxonMobil, Chevron and Honeywell, with April's non-farm payroll report slated for Friday May 8.
Wall Street futures extended declines Friday, following its strongest monthly gain in three decades, after President Donald Trump stepped-up his criticism of Beijing's handling of the coronavirus outbreak and hinted he could impose new tariffs on China-made goods as punishment.
Stocks were further weakened by a second quarter profit warning from Amazon (AMZN) - Get Report, as the world's largest online retailer cautioned that $4 billion in coronavirus-related costs would hack into its bottom line, and a smaller-than-expected share buyback announcement from Apple Inc.s (AAPL) - Get Report quarterly earnings report that failed to provide a near-term outlook.
Trump's tariff threat, however, looms largest over markets after the President appeared to contradict his own security experts in suggesting that COVID-19 may have been genetically modified in a Wuhan laboratory.
He also addressed the possibility of cancelling debt payments on China's trillions in Treasury bond holdings, telling reporters in Washington that "I don't have to do that" because "I can do the same thing, but even for more money, just by putting on tariffs."
With data Thursday showing both a plunge in personal spending and another 3.8 million increase in weekly jobless claims, which followed Wednesday's grim assessment of first quarter GDP, investors were in little mood to extend risk trades overnight, and heading into the weekend, on the back of Trump's anti-China rhetoric.
U.S. equity futures, as a result, look set for notable opening bell declines Friday, with contracts tied to the Dow Jones Industrial Average priced for a 500 point slump and those linked to the S&P 500 indicating a 65 point pullback.
Apple shares were marked 3% lower in pre-market trading, even as the tech giant posted stronger-than-expected earnings of $2.55 per share for its fiscal second quarter, on sales of $58.3 billion, as it decline to provide a current-quarter sales forecast and announced a smaller-than-forecast buyback of $50 billion.
Amazon, too, was marked 6.1% lower after it warned investors that COVID-19 costs would surge, along with revenues, in the current quarter and possible result in the retailing giant's first loss in five years.
Benchmark 10-year U.S. Treasury notes were modestly firmer at 0.599% as investors trimmed risk positions in other markets, while the dollar index nudged modestly higher to 98.99 against a basket of six global currencies.
European stocks slipped lower on the first trading day of the month, as most major markets were closed for the traditional May Day holiday, with the Stoxx 600 falling 0.55%. Britain's FTSE 100 shed just under 2% in early London trading, with energy, travel and banking stocks leading the declines.
Global oil prices were modestly weaker in early European trading, after two consecutive session gains following smaller-than-expected builds in domestic U.S. crude stocks that helped traders rally from multi-year lows from earlier in the week.
Front-month WTI futures contracts for June delivery, the new benchmark for U.S. prices, were last seen 5 cents lower from their Thursday close in New York and changing hands at $1879 per barrel.
Brent futures for July delivery, which benchmark around 60% of global crude purchases, were marked 32 cents lower at $26.16 per barrel.
Overnight in Asia, Japan's Nikkei 225 slumped 2.8% from Thursday's eight-week high to close at 19,619.35 points while the region-wide MSCI ex-Japan index was seen 1.2% lower heading into the close of trading, although a weaker yuan helped lift China's Shanghai Composite to a 1.3% gain to close out the week.