Futures dip as Trump-Kim summit starts, India-Pakistan tensions flare

[February 27, 2019]   By Shreyashi Sanyal

(Reuters) - U.S. stock index futures edged lower on Wednesday, mirroring global markets, as the second U.S.-North Korean nuclear summit kicked off and fresh hostilities erupted between nuclear-armed neighbors India and Pakistan.

North Korean leader Kim Jong Un and Donald Trump met in Hanoi, with the U.S. president saying he was not walking back on U.S. demands for North Korea's denuclearization.

Pakistan said on Wednesday it shot down two Indian fighter jets, a day after Indian warplanes struck inside Pakistan for the first time since a war in 1971, prompting several world powers to urge both sides to show restraint.

"Tension between India and Pakistan is weighing on markets this morning ahead of a very busy day of events," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"We don't expect (Federal Reserve Chair Jerome) Powell's second round of testimony before the U.S. House Financial Committee to change, thereby keeping the focus on geopolitical worries and the Trump-Kim summit that will likely lead to a mixed market session."

Powell said on Tuesday that the Fed was in "no rush to make a judgment" about further changes to interest rates and that rising risks and recent soft data should not prevent solid growth for the U.S. economy this year.

The Fed's dovish signals and optimism around China-U.S. trade talks have boosted equities in recent weeks, pushing the benchmark S&P 500 index to within roughly 5 percent of its record closing high hit in late September.
 

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 25, 2019. REUTERS/Brendan McDermid

At 7:23 a.m. ET, Dow e-minis were down 64 points, or 0.25 percent. S&P 500 e-minis were down 6 points, or 0.21 percent and Nasdaq 100 e-minis were down 14.5 points, or 0.2 percent.

Among stocks, shares of Mylan NV sank 9.9 percent in premarket trading after the generic drugmaker reported a lower-than-expected quarterly profit and forecast weak 2019 earnings, as it grappled with significant problems at its Morgantown, West Virginia plant.

Best Buy Co Inc jumped 11 percent after the consumer electronics retailer beat analysts' estimates for quarterly same-store sales on demand for wearable devices, gaming consoles and appliances during the holiday quarter.

Lowe's Companies Inc rose 2.4 percent after the U.S. home improvement chain's fourth-quarter profit beat market expectations.

The Commerce Department will release its report on December factory goods orders at 10:00 a.m. ET, likely showing a 0.5 percent rise, compared with an unexpected fall in November.

(Reporting by Shreyashi and Medha Singh in Bengaluru; Additional reporting by Susan Matthew; Editing by Anil D'Silva)

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