The Wednesday Market Minute

  • Global stocks retreat following President Donald Trump's Economic Club of NY speech Monday, which failed to signal progress in US-China trade talks.
  • The President's reference to "very substantial" tariffs on China-made goods, as well as the repetition of well-worn soundbites on trade talks, clipped gains for stock markets around the world.
  • European shares slip amid the rising trade concern, while Asia shares slumped amid increasing social unrest in Hong Kong and worries over a near-term China crackdown.
  • US equity futures suggest modest opening bell declines on Wall Street ahead of earnings from Cisco and Hewlett Packard as well as October inflation data at 8:30 am Eastern Time.

Market Snapshot

Wall Street futures slipped lower Wednesday, while global stocks retreated across the board, following a key speech from President Donald Trump that cast confusion over the state of U.S.-China trade talks and raised the prospect of tariff increases if the two sides fail to reach a near-term agreement.

Trump's address to the Economic Club of New York, which had been touted as a treatise on trade, turned out to be far more of a political stump speech that highlighted his administration's financial achievements and renewed his attack on the Federal Reserve.

What was mentioned about trade amounted to little-more than soundbites the President has repeated for most of the past few months, including the assessment that China is "dying to make a deal" and that a "a significant phase one trade deal with China could happen soon." However, he also threatened "very substantial" tariffs on China-made goods if a deal wasn't reached, raising the prospect that levies on $175 billion worth of consumer goods will kick-in on December 15.

The tone of the speech had little impact on U.S. markets yesterday, but clipped gains in Asia and pushed European markets modestly lower at the start of trading in Frankfurt and London.

Wall Street futures, meanwhile, are indicating similar opening bell weakness, with contracts tied to the Dow Jones Industrial Average suggesting an 88 point pullback while those linked to the S&P 500 are guiding to a 9 point dip for the broader benchmark. 

Trump's comments on interest rates, which centered on his criticism of the Fed and its decision to raise rates in late 2018, briefly tipped the U.S. dollar index into the red, but the currency market benchmark bumped 0.05% higher in overnight trading to 98.35 while 10-year Treasury note yields held at 1.917%.

Chairman Powell will kick-off two days of testimony to U.S. lawmakers with an 11:00 am Eastern time appearance before the Senate's Joint Economic Committee. Powell will address the House Budget Committee tomorrow at 10:00 am Eastern. 

Europe's Stoxx 600 was marked 0.4% lower in the opening hours of trading, led to the downside by the trade-sensitive DAX index, which fell 0.6%, while Britain's FTSE 100 fell 0.3% by mid-day trading in London.

Overnight in Asia, ongoing protests in Hong Kong, which have paralyzed the city's financial center for the past three days, added to the region's bearish sentiment, as did Trump's assessment on U.S.-China trade talks, both of which pulled the MSCI ex-Japan index 1.11% lower heading into the close of trading.

Global oil prices were also on the back foot, thanks in part to a modestly stronger U.S. dollar and the International Energy Agency's monthly oil report, which trimmed near-term forecasts for global demand growth. 

Brent crude contracts for January delivery, the global benchmark, were seen 55 cents lower from their Tuesday close and trading at $61.51 per barrel, while WTI contracts for December were marked 40 cents higher at $56.45 per barrel.