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The Tuesday Market Minute

  • Global stocks mixed as trade tensions resurface amid a row over aerospace subsidies in Europe and allegations of currency manipulation in South America.
  • The USTR said it could apply tariffs on $7.5 billion in European-made goods after the WTO rules that France's Airbus receives unfair financial support from Brussels.
  • France's proposed tax on U.S. tech giants could result in tariffs on $2.4 billion worth of imports, the USTR warns.
  • Weakening U.S. factory data, increasing trade tensions hit stocks in Asia while Europe claws its way to modest gains despite the twin tariff threats.
  • Wall Street futures indicate modest opening bell declines ahead of Redbook retail sales at 8:55 Eastern Time and after-the-bell earnings from Salesforce and Workday.

Market Snapshot

U.S. equity futures nudged higher Tuesday, fighting against weakness in global stock markets that followed a surprise move on steel and aluminium tariffs from President Donald Trump and the potential for further levies on European imports linked to a WTO ruling on aerospace subsidies. 

The Geneva-based trade arbiter said Boeing Co (BA) - Get The Boeing Company Report rival Airbus SA (EADSY) - Get Airbus SE ADR - Level I Report receives unfair support from the EU, opening the door for the U.S. to apply tariffs on $7.5 billion worth of European-made goods imported into the United States as compensation.

"In light of (the WTO report) and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs," the U.S. Trade Representative said in a statement late Tuesday.

The WTO decision followed a move by President Trump yesterday to impose fresh levies on steel and aluminium imports from Brazil and Argentina, whom he accused of unfairly devaluing their currencies despite efforts from both their central banks to sell dollars and defend the real and the peso.

A separate U.S.-European tariff dispute also developed late Monday, when the USTR said it would slap a punitive tariff of 100% on around $2.4 billion French-made luxury goods, as well as wine and champagne, in retaliation for France's decision to apply a 3% "digital tax" on U.S. tech giants such as Apple (AAPL) - Get Apple Inc. Report , Facebook (FB) - Get Meta Platforms Inc. Report and Google (GOOGL) - Get Alphabet Inc. Report .

France's junior Economy Minister, Agnes Pannier-Runacher, vowed to be "pugnacious" in both its defense of the digital tax and the resultant U.S. tariff threat. 

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Collectively, the trade-related headlines -- which matched a Global Times of China article that suggested Beijing would not sign a phase one trade agreement that didn't include the rollback of current and pending levies on China-made goods -- spooked investors on Wall Street and triggered overnight selling in Asia.

U.S. equity futures, however, look set to hold modest gains into the start of trading Tuesday, with contracts tied to the Dow Jones Industrial Average marked for a 38 point gain and those linked to the broader S&P 500 suggesting a 5 point opening bell bump. 

European stocks, as well, managed to edge into positive territory at the start of trading Tuesday despite the tariff overhang, with the Stoxx 600 rising 0.21% in Frankfurt and Britain's FTSE 100 slipping 0.12% as the pound jumped to 1.2975 against the U.S. dollar. 

The greenback, in fact, was marked at 97.86 against a basket of its global currency peers in early European dealing, a level that is some 0.5% lower than yesterday as the President's comments on tariffs and currencies hammered the dollar on foreign exchange markets. 

The dollar weakness, as well as the risk-off sentiment that characterized overnight trading in Asia, lifted the yen and clipped 0.64% from the Nikkei 225 in Tokyo, while yesterday's ISM manufacturing data -- which showed the fourth consecutive month of contraction in U.S. factory activity -- added to pressures on regional stocks and pushed the MSCI ex-Japan benchmark into a 0.42% dip heading into the final house of trading.

Global oil prices, however, managed to hold modest overnight gains after yesterday's sell-off, as traders continue to bet that OPEC leaders will agree to extend their current production cut agreement well into the second half of next year, and perhaps even add another 400,000 barrels to the 1.2 million the pact is taking from the market each day.

Brent crude contracts for February delivery, the global benchmark, were seen 18 cents higher from their Monday close and trading at $61.10 per barrel, while WTI contracts for January were marked 29 cents higher at $56.25 per barrel.