LDN - Business

Futures drop as Trump refuels trade war worries

[April 06, 2018] By Sruthi Shankar

(Reuters) - U.S. stock futures dropped on Friday after the United States and China renewed their trade spat, underpinning fears that the tit-for-tat actions could spiral into a trade war, and ahead of a closely watched monthly jobs data.

Globally, stock markets edged downward after President Donald Trump threatened to slap an additional $100 billion in tariffs on Chinese goods and Beijing warned it would fight back "at any cost" with fresh trade measures.

At 7:30 a.m. ET, Dow e-minis <1YMc1> were down 206 points, or 0.84 percent. S&P 500 e-minis <ESc1> were down 21.25 points, or 0.80 percent. Nasdaq 100 e-minis <NQc1> were down 62 points, or 0.94 percent.

Shares of Boeing <BA.N>, the single largest U.S. exporter to China, fell 2.4 percent, leading the losses among big U.S. manufacturers. Caterpillar fell 2.1 percent and Deere <DE.N> dropped 1.2 percent.

Twenty-nine of the 30 Dow Jones Industrial Average <.DJI> components were trading premarket – all in the red. More than 110 S&P 500 <.SPX> stocks were lower, led by chipmakers, which as a group rely on China for about a quarter of their revenue.

Facebook <FB.O>, Amazon <AMZN.O>, Netflix <NFLX.O> and Alphabet <GOOGL.O> - the FANG group - were down between 1.3 percent and 2.3 percent, while Apple <AAPL.O> fell 1.5 percent. These stocks have a heavy influence on major indexes.

The list of decliners were similar to Wednesday, when the United States and China announced tariffs on $50 billion of each others' imports.

After being roiled for most of that day, Wall Street staged a strong comeback to close higher after Trump's top economic adviser Larry Kudlow said the administration was in a "negotiation" with China rather than a trade war.

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 5, 2018. REUTERS/Brendan McDermid

Trump's latest salvo injected a fresh dose of nervousness into the market, already jittery ahead of U.S. jobs data for March for indications of economic health and the future path of interest rate hikes.

Nonfarm payrolls probably increased by 193,000 jobs last month, according to a Reuters survey of economists, lower than the 313,000 increase in February and the 242,000 average of the past three months. The data is due at 8:30 a.m ET (1230 GMT).

The unemployment rate is forecast to fall to 4 percent. Average hourly earnings are expected to have risen, with the annual increase rising to 2.7 percent, but staying below the 3-percent that economists say is needed to lift inflation toward the Federal Reserve's 2-percent target.

Recent economic data has indicated an improving economy, which, coupled with the U.S. tax overhaul, has boosted investors optimism about the upcoming earnings season. First-quarter earnings growth is expected to be the highest in seven years.

Investors will also tune into Fed Chairman Jerome Powell's speech at an event later in the day for signs the central bank could raise rates more than the expected two more times this year.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

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