The Tuesday Market Minute
- Global stocks mixed lower as investors worry that formal charges against Huawei CFO Weng Wanzhou could stall progress in U.S. China trade talks.
- U.S. companies continue to caution that slowing China growth will hit fourth quarter earnings and near-term outlooks, with focus now shifting to Apple's second quarter results after the close of trading today.
- European shares steady despite the global trading gloom, with Britain's FTSE 100 rising ahead of a key series of parliamentary votes on Britain's slow-moving Brexit negotiations.
- Global oil prices edge higher after U.S. Treasury Department sanctions the sale of Venezuelan crude into the United States in order to pressure President Nicolas Maduro to step down.
- U.S. equity futures suggest modest declines at the start of trading on Wall Street, with the S&P 500 called around 6 points lower ahead of earnings from Pfizer, 3M, Ebay and Verizon.
Global stocks were mixed Tuesday, with Wall Street futures drifting into the red, as investors worried that a U.S. decision to pursue criminal charges against the CFO of China's biggest tech company could stall progress in trade negotiations between the world's two biggest economies that are set to resume this week.
The move to charge Huawei Technologies Co Ltd CFO Weng Wanzhou, also known as Sabrina Meng, comes just days before China Vice Premier Liu He is set to arrive in Washington for high-level trade talks before China's Lunar Holidays that both sides hope can push negotiations forward as the March 1 deadline approaches.
"The Company denies that it or its subsidiary or affiliate have committed any of the asserted violations (is) not aware of any wrongdoing by Ms. Meng, and believes the U.S. courts will ultimately reach the same conclusion," Huawei said in a statement.
However, even with U.S. Commerce Secretary Wilbur Ross insisting the charges are "totally separate" from the trade talks, which China itself pushed forward in the World Trade Organization's dispute mechanism earlier today, the timing of the charges could be seen as a major risk to an agreement, particularly given the fact that a host of U.S. companies are citing slowing China growth as reason for weaker-than-expected fourth quarter earnings and tepid 2019 profit outlooks.
Asia shares slipped lower following news of the charges by the U.S. Attorney General's office late Monday, and last night's selling on Wall Street, with the region-wide MSCI Asia ex-Japan index marked 0.32% lower and Japan's Nikkei 225 edging 0.08% to the downside to close at 20,664.64 points.
U.S. equity futures were also marked red, with contracts tied to the Dow Jones Industrial Average I:DJI indicated a 30 point decline and those linked to the S&P 500 I:GSPC suggesting a 2.6 point slip for the broader benchmark ahead of earnings from Pfizer (PFE) - Get Report , 3M (MMM) - Get Report and Verizon (VZ) - Get Report .
Apple Inc. (AAPL) - Get Report , which sounded the alarm on slowing China growth earlier this month when it warned that its second quarter sales would come in much lower than anticipated, reports after the close of trading today, alongside chipmaker Advanced Micro Devices (AMD) - Get Report and online marketplace Ebay (EBAY) - Get Report
Pacific Gas & Electric Corp. (PCG) - Get Report filed for Chapter 11 bankruptcy protection Tuesday as the California utility seeks to managed liabilities related to the state's deadly wildfires that could reach as high as $30 billion.
PG&E, which filed the request in the U.S. Bankruptcy Court for the Northern District of California, is also seeking $5.5 billion in so-called 'debtor-in-possession' financing to fund it ongoing operations and safety initiatives.
European stocks were notably higher, however, by mid-day in Frankfurt, with the Stoxx 600 marked 0.7% to the upside and Britain's FTSE 100 rising 1.5% higher as the pound eased to 1.3168 against the greenback ahead of a key series of Parliamentary votes on Prime Minister Theresa May's Brexit proposals.
The collective concern over U.S. profits, however, triggered by a slowdown in China that is at least in part the result of U.S. trade policy, has many investors betting that the Federal Reserve will signal no desire to tighten its monetary policy over the near term as it starts a two-day rate setting meeting today in Washington.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, traded at a two-week low of 95.68 in early European dealing while the CME Group's FedWatch tool suggests only a 20% chance of a rate hike between now and the end of the year.
Global oil prices were marked modestly higher in overnight trading after the U.S. State Department unveiled sanctions on the sale of crude in the United States by Venezuela's state-owned oil company PDVSA.
The move, which National Security John Bolton said would cost Venezuela as much as $11 billion a year, is aimed at pressuring President Nicolas Maduro into stepping down following a disputed election battle with rival Juan Guaido.
Brent crude contracts for March delivery, the global benchmark, were marked 66 cents higher from their Monday close in New York and changing hands at $60.59 per barrel while WTI contracts for the same month were seen 46 cents higher at $52.45 per barrel.