The Friday Market Minute

  • Global stocks remained unnerved by trade war developments as market braces for fresh U.S. tariffs on $200 billion worth of China-made goods
  • Asia shares slump to 14-month low, Nikkei slides for fifth consecutive session as trade woes and tech stock weakness hit regional benchmarks.
  • Germany's trade surplus narrows to the lowest in four years as July exports and industrial output slides following European-focused tariffs from the White House.
  • Dollar steadies, U.S. Treasury yields dip ahead of today's August employment report, which is expected to show U.S. employers added 193,000 jobs last month, pushing headline unemployment rate to 3.8%.
  • U.S. equity futures point to modestly positive open, but investors are likely to wait for jobs report, alongside average hourly earnings data, before adding risk to portfolios.

Market Snapshot

Global stocks were mixed Friday, with Asian shares falling to a fresh 14-month low, as investors braced for the announcement of tariffs from the White House on $200 billion worth of China-made goods in what will be the most significant escalation to date in the ongoing trade dispute between the world's two biggest economies.

President Donald Trump has vowed to apply the new tariffs, which range between 10% and 25%, immediately following the conclusion of a public consultation on their impact on the U.S. economy, which expired this morning.

China, for its part, has said it will retaliate in kind, but given that it only imports around $160 billion worth of American goods each year, it will likely need to apply so-called "qualitative" measures.

The looming tariffs, as well as the ongoing slump in global emerging markets, continued to clip bullish sentiment in overnight Asia trading, driving investors into safe-haven assets such as the yen, which rose to 110.60 against the U.S. dollar, and out of regional equities.

Japan's Nikkei 225 fell 0.8%, ending lower for a fifth consecutive session -- and the lowest in two-and-a-half weeks -- while the region-wide MSCI Asia ex-Japan index slipped 0.54% to trade at the lowest level since June of last year before paring the decline to around 0.15%.

U.S. equity futures were modestly weaker in early-hours trading, with investors likely focused on today's August employment report from the Bureau of Labor Statistics, which is expected to show that U.S. employers added 193,000 new jobs last month, a move that will likely push the headline unemployment rate to a multi-decade low of 3.8%.

Contracts tied to the Dow Jones Industrial Average (^DJI) were marked 18 points lower from their Thursday close, while those linked to the S&P 500  (^GSPC) indicated a 3.1 point dip for the broader benchmark.

Average hourly wages are expected to rise by 0.2% on the month, according to the Wall Street consensus, a figure that will not likely trouble fixed income investors or increase concern that the tight labor market will stoke inflation. The dynamic of near-full employment and flat wages has driven U.S. stocks, and broader GDP growth, significantly higher this year, even as benchmark 10-year U.S. Treasury bond yields continue to hold well under 3%, with today's "risk off" tone pushing them to 2.88% in overnight trading.

Europe stocks, however,  were modestly stronger at the start of trading Friday, even as data from Germany, the region's biggest economy and the fourth largest in the world, continues to signal trade-related weakness in its manufacturing sector.

Industrial output in Germany fell 1.1% in July, the Federal Statistics Office said, while seasonally-adjusted exports dipped 0.9% as the first of President Trump's European-focused trade tariffs begins to bite. Germany's controversial trade surplus also shrank to €15.8 billion, the lowest in four years.

The Stoxx Europe 600 slipped 0.13% lower by mid-day in Frankfurt, with benchmarks in Germany and France rising by a similar amount, while Britain's FTSE 100 fell 0.8% as investors appeared content to wait for today's Labor market report before adding risk to their portfolios amid renewed headline risk linked to the U.K.'s exit from the European Union. 

International Airlines Group (ICAGY) , the parent company of British Airways, was a notable early mover, falling 3% in the opening minutes of trading after the London-based carrier revealed that 380,000 customers had their personal data stolen from the BA system in what CEO Alex Cruz described as a "sophisticated criminal attack."

Trade-focused demand was also a factor in global oil markets overnight, as crude prices continue to slide this week amid concern that emerging market economies will slow purchases in the wake of their ongoing slump in foreign exchange markets.

However, a bigger-than-expected decline in U.S. crude inventories, which the Energy Information Administration said fell 4.3 million barrels to the lowest levels since 2015 last week, as well as looming sanctions on the sale of Iranian crude, continued to support prices.

Brent crude contracts for November delivery were marked 14 cents higher from their Thursday close in New York and changing hands at $76.64 per barrel while WTI contracts for the same month were seen 19 cents higher at $67.71 per barrel.