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The Monday Market Minute

  • Global stocks edge lower as moves to remove and delay tariffs last week by the White House were offset by the tech sector's reaction to the U.S. blacklisting of Huawei.
  • Optimism was held in check by comments from President Donald Trump threatening the "end of Iran" as tension in the Gulf region continue to flare.
  • Global oil prices jump higher following the President's Iran-related Tweet and comments from Saudi energy minister Khalid al-Falih that suggests the cartel will extend its agreement on production cuts next month in Vienna.
    European stocks edge lower, with tech shares active following a Reuters report that suggested China-backed 5G networking leader Huawei has had its business relationship with Google severed following last week's blacklisting by the U.S. Commerce Department.
  • Wall Street futures suggest a modestly firmer open to start to the trading week, which will see a host of retail earnings, home sales data and a speech from Federal Reserve Chairman Jerome Powell late Tuesday.

Market Snapshot

Global stocks edged lower Monday, while a surge in oil prices linked to tensions in the Gulf region kept investors cautious, as last week's move by the White House to remove tariffs on steel imports from Canada and Mexico added to optimism of a near-term breakthrough in trade talks with China.

Early market sentiment was clipped, however, by the tech sector's reaction to last week's decision by the Commerce Department to blacklist China's Huawei from doing business with American firms. 

President Donald Trump appeared unwilling to offer a similar olive branch to Beijing, however, telling Fox News's Steve Hilton that tariffs were "totally killing" China and causing U.S. companies to move production facilities to other countries in the region, such as Vietnam. He added that any agreement with Beijing had to be weighted in America's favor and couldn't be a "50-50" proposition.

Still, moves to remove tariffs on North American steel imports, which could pave the way for ratification of the new NAFTA agreement reached last year, as well as a decision to delay the imposition of tariffs on European and Japanese made cars heading into the United States -- even as the President deemed them to be a national security risk -- has some investors looking for a surprise detente with China heading into next month's G20 Summit in Osaka.

U.S. equity futures reflected that cautious optimism in early Monday trading, with contracts tied to the Dow Jones Industrial Average suggesting an 137 point pullback for the 30-stock average and those linked to the S&P 500 indicating a 19.3 point decline for the broader benchmark. 

Qualcomm (QCOM) , which earns nearly two-thirds of its revenue in China, was marked 4.9% lower in pre-market trading Monday, indicating an opening bell price of $77.51 each. Micron Technology (MU) , a chipmaker with a 66.3% revenue exposure to China, was marked 3.9% lower at $34.65 while Applied Materials (AMAT) , which gets 45.5% of its topline from China, slipped 2.7% to $41.55.

Apple Inc. (AAPL) shares were indicated 2.8% lower after analysts at HSBC cut their price target on the tech giant amid concerns that potential tariffs on imports from China could force it to pass on increased iPhone costs to U.S. consumers.

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Tesla Inc. (TSLA) shares extended their year-to-date decline close to 40%, as analyst at Wedbush raised further concerns over underlying demand for the carmaker's flagship Model 3.

European stocks were also weaker after the opening hour of trading in Frankfurt, with the Stoxx 600 falling 1.2%. Britain's FTSE 100 slumped 1% even as a weaker pound made stocks on the internationally-focused benchmark -- who earn around 75% of their revenues outside of the U.K. -- more attractive than their European peers.

Nokia Oyj (NOK) shares were a notable early market mover in Europe, with shares rising 1.7% in Helsinki following a Reuters report that suggested China-backed 5G networking leader Huawei Technologies has had its business relationship with Google (GOOGL) severed following last week's blacklisting by the U.S. Commerce Department. 

Several regional chipmakers traded firmly in the red, however, following a Nikkei report that Infineon Technologies  (IFNNY) had talked shipments to Huawei, with Europe's biggest semiconductor firm falling 3.4% in Frankfurt to €17.89 each and pulling rivals such as STMicroelectronics (STM) and Apple (AAPL) suppliers AMS AG (AMSSY) and Dialog Semiconductor (DLGNF) sharply lower.

The President's comments on the current tensions in the Gulf region, however, and a weekend Tweet in which he threatened "the official end of Iran" kept investors from adding further risk positions. 

Oil prices were the first and most-predictable reactor to the comments, with upward pressure coming from a weekend meeting of OPEC officials that said it would recommend the cartel extend its agreement on production cuts -- which, along with Russia, are taking 1.2 million barrels from the market each day -- into the second half of this year.

"It is critical that we don't make hasty decisions - given the conflicting data, the complexity involved, and the evolving situation," said Saudi Arabia's influential energy minister Khalid al-Falih. "But I want to assure you that our group has always done the right thing in the interests of both consumers and producers; and we will continue to do so." 

Brent crude contracts for July delivery, the global benchmark for oil prices, were marked 43 cents higher from their Friday close in New York and changing hands at $72.64 per barrel while WTI contracts for June delivery were seen 4 cents lower at $62.80 per barrel.

Overnight in Asia, stocks booked solid gains on the tempering of trade rhetoric from the White House, with the region-wide MSCI ex-Japan index rising 0.5% into the close of trading. Japan's Nikkei 225 also kicked-off the week on a positive note, rising 0.24% after a much stronger-than-expected reading of first quarter GDP growth, which showed a 2.1% annualized gain, and a modestly weaker yen boosted sentiment.