The Tuesday Market Minute
- Global stocks slide ahead of a busy corporate earnings session on Wall Street and the start of the Fed's two-day policy meeting in Washington.
- President Donald Trump says China "should probably wait out" the U.S. election cycle before re-starting trade talks with Washington.
- Asia shares edge higher after the Bank of Japan signals near-term policy support and trade talks between the U.S. and China resume this week in Shanghai.
- European shares slip as business and consumer sentiment weaken, while Britain's FTSE 100 nudges higher as the pound extends declines to a fresh 28-month low.
- U.S. equity futures suggest opening bell declines on Wall Street ahead of earnings from Mastercard, Merck, Eli Lilly and Procter & Gamble as well as key inflation data at 8:30 am Eastern time.
Wall Street futures extended declines Tuesday after President Donald Trump painted a grim picture of U.S.-China trade talks and suggested negotiations might be postponed until after next year's elections.
Trump unleashed a series of Tweets prior to the start of trading Tuesday that indicated frustration with the pace of progress between Washington and Beijing on trade between the world's two biggest economies as representatives from each side meet this week in Shanghai.
"China is doing very badly, worst year in 27 - was supposed to start buying our agricultural product now - no signs that they are doing so," Trump said. "That is the problem with China, they just don't come through. Our Economy has become MUCH larger than the Chinese Economy is last 3 years."
...to ripoff the USA, even bigger and better than ever before. The problem with them waiting, however, is that if & when I win, the deal that they get will be much tougher than what we are negotiating now...or no deal at all. We have all the cards, our past leaders never got it!— Donald J. Trump (@realDonaldTrump) July 30, 2019
The comments followed an overnight session for global stocks that had investors preparing for another heavy slate of corporate earnings, highlighted by Apple Inc.'s (AAPL - Get Report) third quarter report after the close of trading, and eyed weakening growth and sentiment data in major economies around the world.
Contracts tied to the Dow Jones Industrial Average suggest a 97 point decline at the start of trading Tuesday, around 50 points more than were indicated prior to the President's Tweets, while those linked to the broader S&P 500 are guiding to a 14.4 point pullback amid one of the busiest sessions for corporate earnings so far this year.
Beyond Meat (BYND) shares were a notable early market mover, falling sharply lower in pre-market trading after the vegetarian food producer said it may issue new shares to fund its expansion plans after boosting its full-year profit guidance amid surging demand for its plant-based burgers and sausages.
Under Armour (UA - Get Report) shares, however, slumped 10.8% after it posted better-than-expected second-quarter earnings Tuesday but issued softer 2019 earnings guidance and North American sales for the sportswear group continue to decline.
Investors are also keeping a cautious stance on risk as the Federal Reserve kicks-off its two-day policy meeting in Washington against a backdrop of a resilient U.S. economy and weakening global growth. Traders are still expecting a 25 basis point rate cut from C hairman Jerome Powell and his colleagues tomorrow, while major central banks around the world are holding fire on their own stimulus plans until the Fed defines it policy intentions for the rest of the year.
The Bank of Japan hinted as much earlier Tuesday, telling investors it will "take additional easing steps without hesitation if there is a risk the economy will lose momentum for hitting our price target" thanks in part to softer growth forecasts linked to the U.S.-China trade war.
The European Central Bank, which signaled a September rate move and the resumption of quantitative easing last week, will have also been minded by data from France today showing a slower-than-expected second quarter growth rate and surveys from German indicating declining consumer confidence.
However, even with prospect of near-term central bank support, and the resumption of trade talks between the U.S. and China this week in Shanghai, investors appear reluctant to take U.S. stocks further into record highs until either the Fed makes it intentions clear or Apple surprises markets with a stronger-than-expected near-term outlook later today.
Overnight in Asia, the Bank of Japan's hint at policy support weakened the yen, which slipped to 108.56 against the U.S. dollar, and helped the Nikke 225 notch a 0.43% gain by the close of trading in Tokyo while the broader MSCI Asia ex-Japan index nudged 0.14% higher into the final hours of the session.
Europe stocks, meanwhile, slumped lower amid a series of weaker-than-expected blue chip corporate earnings and a softer reading of Eurozone consumer and business sentiment for the month of July, as well as the President's assessment on trade talks.
The Stoxx 600 benchmark fell 1.12% in Frankfurt while Britain's FTSE 100 edged 0.04% lower as the pound extended declines to a fresh 28 month low of 1.2173 against the greenback, boosting the value of stocks on the benchmark that earn their revenues outside of the United Kingdom.
Global oil prices rose for a fourth consecutive session Tuesday, lifting U.S. crude prices past $57 per barrel, as investors priced in both near-term rate cuts from the Fed and other central banks that offset concerns for slumping demand over the second half of the year.
Brent crude contracts for September delivery, the global benchmark, were seen 55 cents lower from their Monday close and changing hands at $64.26 per barrel while WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 541 cents higher at $57.26 per barrel.