Level 2

US open: Stocks turn lower as confusion surrounds trade war truce

By Iain Gilbert

Date: Tuesday 04 Dec 2018

US open: Stocks turn lower as confusion surrounds trade war truce

(Sharecast News) - Wall Street trading started off with some losses on Tuesday as looked into the fine print of Monday's trade war ceasefire with China and digested a flattening yield curve in government debt.
As of 1535 GMT, the Dow Jones and S&P 500 were both down 0.64% to 25,661.65 and 2,772.64, respectively, while the Nasdaq was 0.60% softer at 7,396.74.

Following Monday's rally, market participants grew increasingly sceptical about the truce between China and the US with confusion about when it would kick-off also undermining sentiment.

Trump's economic advisor, Larry Kudlow told reporters on Monday that it would start on 1 January, but the White House later issued a statement saying that the 90-day truce began on 1 December.

There was also confusion over the details of the truce, with several senior White House figures contradicting one another.

Oanda analyst Craig Erlam said: "The weekend dinner date between Trump and Xi initially drew a positive response, with markets rallying at the prospect of the trade war being paused for a few months and possibly even stopped altogether as talks progress well.

"This has since drawn plenty of scepticism about just how significant an agreement it was and what can possibly be achieved in the next few months that will prevent further tariffs being imposed."

Also weighing on sentiment was the flattening of the US interest rate curve, as the yield on five-year government debt fell below that on three-year debt - something that has foreshadowed previous recessions - as investors turned less confident around the outlook for economic growth.

Elsewhere, the dollar slipped 0.14% against the Sterling to 0.7848, while oil continued its rally - with Brent Crude up 1.25% to $62.46 a barrel and West Texas Intermediate up 0.72% to $53.33.

In corporate news, watchmaker Movado jumped 18.22% after its third-quarter revenue beat expectations but profit fell short.

Industrial distributor HD Supply was up 3.71% in early trades after its third-quarter earnings and revenue topped analysts' forecasts and the company upped its full-year guidance.

Elsewhere, AutoZone shares took off 6.55% after its first-quarter same-store sales rose 2.7%, beating expectations for a 2% increase.

Dollar General was down 5% in early trade after its third-quarter results, as it cut its 2018 earnings per share outlook to $5.85-$6.05 from $5.95-$6.15.

Apple was down 1.83% after leading Monday's rally.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page