Futures dip after rally as trade talk euphoria fades

[July 02, 2019]  By Shreyashi Sanyal

(Reuters) - U.S. stock index futures edged lower on Tuesday, a day after the benchmark S&P 500 index hit a record high, as optimism over progress in U.S.-China trade talks subsided and a fresh threat of tariffs on Europe kept investors on edge.

Adding to the downbeat mood was a clutch of discouraging manufacturing surveys in the past 24 hours from around the world that once again stoked fears of a global economic slowdown.

U.S. markets rose on Monday as Washington and Beijing agreed to resume trade talks and President Donald Trump offered concessions including no new tariffs and an easing of curbs on Huawei Technologies Co Ltd.

Washington threatened to slap tariffs on $4 billion of additional EU goods, ratcheting up pressure on Europe in a long-running dispute over aircraft subsidies.

With EU-U.S. trade tensions resurfacing, the way the U.S.-China trade dispute is being solved gives some guidance on how the United States is dealing with other trading partners, said Florian Hense, an economist at Berenberg in London.

At 7:19 a.m. ET, Dow e-minis <1YMcv1> were down 32 points, or 0.12%. S&P 500 e-minis <EScv1> were down 3.5 points, or 0.12% and Nasdaq 100 e-minis <NQcv1> were down 15.25 points, or 0.2%.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 5, 2019. REUTERS/Brendan McDermid/File Photo

The S&P 500 and the Dow Jones indexes posted their best June performance in decades, on hopes that the Federal Reserve would cut interest rates to preserve a decade-long U.S. expansion, after a breakdown in trade talks sent markets into a tailspin in May.

Market participants still expect a rate cut by the Fed of at least a quarter of a percentage point at its July 30-31 policy meeting, despite the latest developments in trade talks.

Among stocks, Western Digital Corp <WDC.O> fell 3% in premarket trading after Benchmark cut its rating on the hard-disk drive maker's stock to "sell."

Coty Inc <COTY.N> dropped 2.5% as multiple brokerages cut price targets on the cosmetics maker's shares, a day after the company said it would restructure and write down about $3 billion in value of brands acquired from Procter & Gamble Co <PG.N>.

(Reporting by Shreyashi Sanyal & Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila)

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