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US open: Stocks head south ahead of Fed minutes

By Iain Gilbert

Date: Wednesday 22 May 2019

US open: Stocks head south ahead of Fed minutes

(Sharecast News) - US stocks headed south at the open on Wednesday, with market participants continuing to keep their eyes on the intensifying trade war between Washington and Beijing.
As of 1525 BST, the Dow Jones Industrial Average was down 0.17% at 25,833.92, while the S&P 500 moved 0.14% lower to 2,860.36 and the Nasdaq traded 0.13% softer at 7,775.76.

The Dow opened 43 points lower after Washington's decision to temporarily curb some sanctions against Chinese telecoms giant Huawei provided some relief and boosted stocks.

On Tuesday, tech shares managed to recoup some of their losses from the prior session, but the positive sentiment failed to make its way across to Asian markets overnight, which were little changed.

China's ambassador to the US said on Tuesday that Beijing was open to the idea of continuing trade talks, stating that it was Washington that was being indecisive.

Some investors were holding out hope that a US-China trade deal can still be achieved, most likely at this year's G20 summit at the end of June.

In corporate news, retailer Lowe's tumbled 11.22% in early trade after cutting its full-year guidance on the back of weak first-quarter earnings, while Target darted 8.67% higher as Q1 same-store and e-commerce sales topped expectations.

Avon Products shot up 14.46% following reports that it was on the brink of acquiring iconic Brazilian makeup company Nature Cosmetics.

Carmaker Tesla was heading towards it sixth straight day of declines after analysts at Citigroup issued an updated bear case on the group.

On the data front, mortgage applications figures for May will be posted at 1600 BST, while minutes from the Federal Reserve's latest FOMC meeting will come at 1900 BST.

Market participants expect the Federal Reserve to provide some insight into its meeting on 1 May, when policymakers left interest rates unchanged and signalled little appetite to adjust them any time soon.

While in Hong Kong overnight, St Louis Fed president James Bullard said the FOMC may need to lower its short-term interest-rate target if inflation did not appear on track to rise back to desired levels at 2%.

Elsewhere, the USD hit a two-week high ahead of the Fed minutes - up 0.53% against the GBP at 0.7912p as of 1505 BST.

However, London Capital Group analyst Jasper Lawler stated the USD was quite simply "the best of a bad bunch."

"Brexit weighs on the pound, growth concerns on the euro, the Aussie and Kiwi are also suffering from the trade war and rate cut forecasts. It's just the yen and its quality as a haven which has been more in demand than the buck."

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