The Thursday Market Minute

  • Global stocks drift lower amid a series of moves on trade and security that underscore the depth and breadth of the U.S.'s trade wars.
  • Huawei is added to the U.S. 'Entity List' that blacklists company's from doing business with the United States, just hours after the President declares an information technology national emergency.
  • European stocks drift lower despite reports of an auto tariff delay, while Britain's pound sterling slides amid renewed political uncertainty and the fate of Prime Minister Theresa May.
  • Weak U.S. data pushing 10-year bond yields to 15-month lows, while TIC data shows China sold the most U.S. Treasuries in more than three years in March.
  • Oil prices gain amid rising Gulf tensions, shrugging off a build in U.S. crude inventories and a bullish OPEC report on global demand.
  • Wall Street futures suggest a modestly firmer open, with the S&P 500 called 9 points to the downside, ahead of earnings from Walmart before the bell and Nvidia and Applied Materials after the close of trading. Housing starts, weekly jobless claims and the Philadelphia Fed Index will all be released at 8:30 am Eastern time.

Market Snapshot

Global stocks traded lower across the board Thursday, although U.S. stocks look set for a positive open, as investors reacted to a series of moves by President Donald Trump, including the blacklisting of China's Huawei Technologies from doing business with the United States, that underscored the breadth of his myriad trade disputes and their potential impact on the world's largest economy.

Huawei, the world's biggest telecoms equipment maker and a key plank in China's ambitions towards dominating 5G networking around the globe, was placed on the 'Entity List' by the U.S. Commerce Department late Wednesday, a move that effectively prevents it from acquiring components and technology from American companies without prior government approval.

The decision will "prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests," according to a statement from Commerce Secretary Wilbur Ross, and followed an executive order from the President that declared a national emergency linked to "threats against information and communications technology and services in the United States".

The moves highlighted the distance between China and the United States on trade, following their tit-for-tat tariffs increases over that past week, and snuffed out a late Wednesday rally sparked by multiple media reports that Trump will delay applying new levies on auto imports from Europe and Japan for at least six months.

However, with Canada's Foreign Minister, Chrystia Freeland, telling reporters in Washington that her country isn't likely to ratify a new NAFTA trade agreement while tariffs on steel and aluminium remain in place, and the U.S. mired in disputes from London to Tokyo, investors were unwilling to add to risk positions in overnight Asia trade.

U.S. equity futures echoed that concern Thursday, although contracts tied to the Dow Jones Industrial Average are indicating a 130 point opening bell gain while those linked to the S&P 500 suggest an 13 point bump for the broader benchmark.

Markets were further rattled by weaker-than-expected readings for retail sales and activity in the manufacturing sector, both of which showed slumped last month as investor and consumer sentiment took a hit from the global trade war, sending benchmark 10-year U.S. Treasury yields to a near 15-month low of 2.359% and accelerating bets on a Federal Reserve rate cut later this year.

The U.S. Treasury moves came against data from the Treasury department which showed that China sold the largest portion of its U.S. government bond holdings -- $20.45 billion -- in more than three years in March, taking their total to $1.12 trillion, the lowest since May 2017, and re-igniting questions as to whether the largest U.S. creditor will use those holdings as a weapon on the escalating trade war.

Cisco Systems  (CSCO - Get Report)  were a notable pre-market mover Thursday, rising 3.4% after the network equipment maker posted stronger-than-expected third quarter earnings and said tariff increases on China-made goods wouldn't affect its near-term profit outlook.

Amazon Inc. (AMZN - Get Report) shares were also in the green, rising 0.42% after Warren Buffett's Berkshire Hathaway (BRK.A - Get Report) revealed its first investment in online giant that is now closing in on $1 billion.

Walmart Inc. (WMT - Get Report) posted much stronger-than-expected first quarter earnings as same-store sales in the United States beat expectations amid a renewed push in the retailer's e-commerce division.

Walmart said adjusted earnings for the three months ending in April, the retailer's fiscal first quarter for the 2020 financial year, came in at $1.13 per share, well ahead of the $1.02 forecast. Reported earnings rose 84.7% from last year to $1.33 per share, reflecting a 20 cents per share gain from the group's holding in China-based online retailer (JD - Get Report) .

European stocks were weaker at the start of trading, as well, with the Stoxx 600 sliding 0.13% in Frankfurt and Germany's DAX performance index dipping 0.15% as auto stocks gave back yesterday's late-trading gains. 

Britain's FTSE 100 was also in the red, falling 0.2% and failing to take advantage of a weaker pound, which drifted to 1.2833against the U.S. dollar amid increasing speculation that Prime Minister Theresa May could be forced to resign over her failure to negotiate a competent Brexit deal to take the country out of the European Union.

Global oil prices were back on the rise, however, even amid the broader market sell-off, as reports of U.S. staff leaving the American Embassy in Tehran in the face of security threats highlighted the simmering tensions in the Gulf region that have been linked to a series of attacks on Saudi tankers, boosting prices despite a rise in domestic U.S. crude stocks and questions over the strength of global demand.

Brent crude contracts for July delivery, the global benchmark for oil prices, were marked 57 cents higher from their Wednesday close in New York and changing hands at $72.34 per barrel while WTI contracts for June delivery were seen 62 cents higher at $62.64 per barrel.

Ask Cramer | Get Answers to Your Most Pressing Market Questions