The Wednesday Market Minute

  • Global stocks extend declines on concerns over a collapse in U.S. China trade talks and its impact on an already-fragile world economy.
  • China's April trade data shows a surprise increase in exports, but a wider-than-expected trade deficit with the United States of $21.01 billion, adding pressure to the contentious talks this week in Washington.
  • Europe extends declines despite stronger-than-expected German industrial data as concerns over the fate of the regional economy continue to pressure shares.
  • Oil prices reverse gains as Iran sought the support of its European allies to curb sanctions on the sale of its crude and threatened to ramp up its nuclear program as tensions with Washington continue to escalate.
  • U.S. stocks set for opening bell declines ahead of earnings from Coty, Walt Disney and Wynn resorts as well as mortgage and crude stockpile data later in the session.

Market Snapshot

Global stocks extended declines Wednesday as investors grew increasingly concerned over a potential collapse in U.S. China trade talks and the impact it would have on an already-fragile world economy.

U.S. stock futures were also under pressure, following last night's 500 point fall for the Dow Jones Industrial Average, as investors balance some promising signals on growth, solid domestic corporate earnings against worries that tomorrow's talks in Washington will scupper months of negotiations on trade between the world's two biggest economies.

Contracts tied to the Dow suggest a 35 point dip for the 30-stock average today, while those linked to the S&P 500 indicate a 6.5 point decline for the broader benchmark, amid what remains extremely favorable fundamentals for U.S. equities in the form of rising corporate profits, improving labor market and wage gains, an economy growing at a near 3% clip and a dovish central bank that isn't prepared to signal rate hikes until at least the latter part of this year.

The reason for the China pullback & attempted renegotiation of the Trade Deal is the sincere HOPE that they will be able to "negotiate" with Joe Biden or one of the very weak Democrats, and thereby continue to ripoff the United States (($500 Billion a year)) for years to come....

— Donald J. Trump (@realDonaldTrump) May 8, 2019

....Guess what, that's not going to happen! China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We'll see, but I am very happy with over $100 Billion a year in Tariffs filling U.S. coffers...great for U.S., not good for China!

— Donald J. Trump (@realDonaldTrump) May 8, 2019

Sprint Corp. (S - Get Report) shares were indicated lower following a weaker-than-expected fourth quarter earnings report that included a slump in new phone subscribers to the country's fourth-largest carrier as it prepares to merge with rival T-Mobile US (TMUS - Get Report) .

Electronic Arts (EA - Get Report) shares were indicated sharply after the video game maker topped analysts' sales forecasts in its fourth quarter earnings report and said demand for its new Apex Legends release will help drive gains in the coming financial year.

International equity markets continue to navigate a far more complicated path towards extended 2019 gains, with investors concerned that a U.S.-China trade war will damage growth prospect in economies that export goods to both countries.

European stocks, which have remained sensitive to develops in U.S.-China trade talks while having no influence on their outcome, fell modestly at the start of trading today, following yesterday's sharp declines, against a backdrop of weaker growth and political uncertainty.

The Stoxx 600 index, the regional benchmark, was seen 0.24% lower, however, by mid-day in Frankfurt even after a stronger-than-expected reading for Germany's manufacturing output over the month of March and solid second quarter profits from industrial giant Siemens AG (SEIGY) .

Asia stocks, as well, found some solace from a mixed set of China trade data that showed a surprise increase in April exports, but still recorded sharp declines as the momentum from last night's sell-off on Wall Street washed over markets around the region.

The MSCI Asia ex-Japan index was marked 0.9% lower while Japan's Nikkei 225 tumbled 1.46% amid concerns over lower-than-expected profit forecasts from Toyota Motor Co.

Global oil prices extended declines Wednesday as Iran sought the support of its European allies to curb sanctions on the sale of its crude and threatened to ramp up its nuclear program as tensions with Washington continue to escalate.

Iran's President, Hassan Rouhani, told state television that his administration would start enriching uranium within 60 days if European signatories to the Joint Comprehensive Plan of Action (JCPOA) treaty -- which President Trump walked away from this time last year -- didn't press Washington to revoke the sanctions it has placed on the sale of Iranian crude. He also said he would stop selling excess enriched uranium, a move that would add to the country's closely-monitored stockpiles.

Brent crude contracts for July delivery, the global benchmark for oil prices, were marked 13 cents lower from their Tuesday close in New York and changing hands at $69.75 per barrel, reversing earlier gains following data from China showing record crude imports over the month of April.

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