By Ben St. Clair 
   -- Tariffs loom over strong earnings 
 
   -- Oil prices climb following Trump's tweet 
 
   -- U.S. stocks set for flat opening

Global stocks mainly edged lower Monday as concerns of tariffs hitting the global economy weigh down positive U.S. earnings results.

More than one third of S&P 500 companies report results this week, and investors say they'll be watching for signs that tariffs are impacting corporate decision making.

Futures pointed to small opening gains for the S&P 500 and Dow Jones Industrial Average.

Oil prices headed higher on Monday after President Donald Trump tweeted a message to his Iranian counterpart warning that threats against the U.S. would be met with consequences such as few in history have suffered. Brent crude, the global benchmark, was up 1% at $73.83 a barrel.

The Stoxx Europe 600 was down 0.1% Monday, led by a 0.8% decline in the auto sector. Asian markets were mixed.

Last week, President Donald Trump reiterated his threat to impose tariffs on European autos despite opposition from U.S. lawmakers and domestic and foreign auto makers. Trade is expected to be prominent on the agenda when European Commission President Jean-Claude Juncker visits the White House on Wednesday.

The "big three" U.S. auto makers -- Ford, General Motors and Fiat Chrysler -- and tech giants Facebook, Amazon and Google parent Alphabet are all set to report second-quarter earnings this week.

Corporate earnings so far have come in above expectations, with 87% of companies posting stronger-than-expected profits and 77% beating revenue expectations. Earnings are up 21% from the year-earlier period, which would mark the second-highest growth rate since the third quarter of 2010, according to FactSet.

"I would have expected better price reaction to" strong corporate earnings, said Craig Callahan, president and founder of ICON Advisers. Instead, trade uncertainty has left markets "interrupted or disrupted by investors guessing about events," Mr. Callahan said.

Markets have seesawed in recent months as investors reacted to heightened trade rhetoric and the imposition of U.S. tariffs and retaliatory measures from China and Europe.

The trade-related selloffs have been driven more by sentiment than financials, said Patrick Spencer, Baird's vice chairman of equities. Even though tariffs make up a fraction of world GDP, the concern is that "companies will just stop spending because they don't know what's going to happen," Mr. Spencer added.

Over the weekend, finance ministers and central bankers of the G-20 group of countries ended their meeting with little progress on resolving global trade tensions. U.S. Treasury Secretary Steven Mnuchin said "it's definitely a realistic possibility" that Mr. Trump would follow through with his threat to impose tariffs on $500 billion of Chinese goods.

In Asia, the yen and Japanese financial stocks jumped, while government bonds sold off, after Reuters reported that officials at the Bank of Japan, whose board meets next week, were debating how to make its stimulus program more sustainable.

Japan's Nikkei fell 1.3%, as a jump in the yen helped push currency-sensitive shares lower. The Japanese yen was up 0.3% against the dollar with the WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, down 0.1%.

Meanwhile, the Shanghai Composite Index rose 1.1% and Hong Kong's Hang Seng edged up 0.1%.

Elsewhere, yields on 10-year U.S. Treasurys edged down Monday to 2.890% from 2.895% Friday afternoon. Bond yields move inversely to prices.

Mike Bird, Lauren Pollock and Peter Santilli contributed to this article.

(END) Dow Jones Newswires

July 23, 2018 09:06 ET (13:06 GMT)

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