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The Friday Market Minute

  • Global stocks mixed, with modest gains in Asia and accelerating declines in Europe, following weakening China data and a report that White House officials will delay licences allowing U.S. firms to do business with Huawei Technologies.
  • China factory gate prices fall for the first time in three years, while consumer inflation spikes amid a rise in food and pork prices, underscoring weakness in the broader economy.
  • European sentiment hit by news of the collapse of Italy's coalition government, a move that could trigger fall elections in Europe's third-largest economy.
  • Global oil prices add to modest gains following reports that Saudi Arabia will limit crude exports to under 7 million barrels per day for this month and next in order to balance world markets.
  • Wall Street futures suggests deepening opening bell declines Friday ahead of producer price inflation data at 8:30 am Eastern time.

Market Snapshot

U.S. equity futures drifted lower Friday, hiving off gains from the best rally on Wall Street in at least two months last night, as investors reacted to another round of grim economic data from China and a report that suggests Washington could delay licences for American firms seeking to do business with Huawei Technologies.

Sentiment was further damaged by the potential for new elections in Italy, where one side of the country's fragile coalition government, led by the conservative League Party, has asked Prime Minister Giuseppe Conte to dissolve parliament and call for fresh polls in September for Europe's third largest economy.

Bloomberg reported Friday that the White House is prepared to delay awarding licences to U.S. firms wishing to do business with China-backed Huawei, the world's biggest handset marker, owning to China's decision to suspend U.S. agricultural purchases. The report came just ahead of data showing Chinese factory gate prices fell for the first time in three years last month, suggesting firms are having to cut prices in order to deal with slowing exports and rising tariffs to U.S. markets. 

China also pegged its yuan north of the $7 mark for the second consecutive session this morning, allowing it to trade past the psychologically import market for the seventh day in-a-row, risking further ire from President Donald Trump, who only yesterday renewed his criticism of the Federal Reserve and complained of the strength of the U.S. dollar on international foreign exchange markets.

The yen traded at an 8-month high of 105.50 against the greenback in overnight trading, although the Nikkei 225 was able to eek out a modest 0.44% gain on the session, while the broader MSCI Asia ex-Japan benchmark slipped 0.06% into the final hours of trading.

U.S. equity futures gave back earlier gains following the Bloomberg report on Huawei, with contracts tied to the Dow Jones Industrial Average now suggesting a 140 point opening bell decline for the 30-stock average while those linked to the S&P 500 indicating a 22 point slide for the broader benchmark.

Uber Technologies (UBER) shares were a notable early market mover, tumbling more than 7% after the world's biggest ride-hailing group posted a wider-than-expected second quarter loss of $5.24 billion and cautioned that more red ink would follow in the months ahead.

European stocks were weaker across the board, as well, with Italy's FTSE MIB index leading declines with a 2.4% slump following League Leader Matteo Salvini's declaration that the coalition government had collapsed, while Germany's trade-sensitive DAX index was marked 1.1% lower on both the Huawei report and the slump in China factory gate prices.

Britain's FTSE 100 was seen 0.25% lower in London, led to the downside by basic resource stocks, even as the pound slumped to 1.2090 against the dollar after the U.K. economy contracted for the first time in seven years last quarter as the impact of the country's decision to leave the European Union, and the government's threat to do so without a trade deal, too its toll.

Away from equities, global government bond yield resumed their rally in overnight trading as risk sentiment faded, pulling benchmark 10-year U.S. Treasury note yields to 1.697%. The dollar index, which tracks the greenback against a basket of six global currencies, was seen 0.1% lower at 97.50 in early European trading. 

Gold prices held near the $1,500 dollar mark, following a 4.6% weekly rise that marks the best week in more than three years, with the bullion's year-to-date gain of 17% topping dollar-returns for the S&P 500. 

Global oil price rose modestly in overnight trade, but remain in bear market territory, after Saudi Arabia said it would limit exports to under 7 million barrels per day for this month and next in order to balances world markets that have suffered from oversupply owing to record U.S. production rates and weakening end demand.

Brent crude contracts for October delivery, the global benchmark, were seen 84 cents higher from their Thursday close and changing hands at $58.22 per barrel while WTI contracts for September, which are more tightly linked to U.S. gas prices, were marked 71 cents higher at $53.25 per barrel.