Global Stocks Waver as U.S. Plots New Tariffs on EU
April 09 2019 - 8:34AM
Dow Jones News
By David Hodari
U.S. stocks were set to open lower Tuesday after the Trump
administration took a step toward imposing tariffs on imports from
Europe.
Futures pointed to the S&P 500 slipping 0.1% at the open, a
move that would reverse its small increase on Monday. Dow Jones
Industrial Average futures were nearly flat.
Walt Disney Company outperformed its Dow counterparts, climbing
0.9% in premarket trade ahead of its investor day on Thursday, when
the media giant is expected to detail its plans to integrate the
assets it purchased from 21st Century Fox. Fox Corp. and The Wall
Street Journal share common ownership.
In Europe, the Stoxx Europe 600 was up 0.1% in afternoon
trading, with a 0.8% increase for the index's banking sector
outweighing a 0.7% slip in technology stocks.
Most U.S. and European stocks were undisturbed by the U.S. Trade
Representative office's list of European Union goods that will be
subject to tariffs if the bloc continues to subsidize Airbus. Those
tariffs would affect about $11 billion in imports to the U.S.,
including helicopters, bicycles, cheese and wine. Shares in Airbus
fell 1.7%.
Still, U.S. Trade Representative Robert Lighthizer said the
Trump administration would wait for World Trade Organization
clearance to implement the duties. That wait for a WTO green light
"is something the U.S. tends to do when they're not fully ready to
implement tariffs," said Lefteris Farmakis, global macro strategist
at UBS Group. "We've had cases where tariffs are pending and it's
probably something the market is willing to look through for
now."
The tariff move followed several weeks of reports that the Trump
administration was on the verge of completing a trade deal with
China after a year of mutual import levies and frosty rhetoric.
While the threat of $11 billion in tariffs is minor compared
with the duties the Trump administration initially threatened
against China last spring, the impact of trade disputes on the
global economy is likely to continue, said Marie Owens Thomsen,
chief economist at Indosuez Wealth Management.
After the Democratic Party won control of the House of
Representatives in November's midterm elections, "The president
feels he has few degrees of freedom left--trade and foreign policy
are two of them and they'll continue to dominate policy," Ms. Owens
Thomsen said.
Losses for U.S. stocks Tuesday would come against a backdrop of
continuing strength for U.S. equities so far this year, with gains
in 2019's second quarter so far extending those of the year's first
three months amid investor bets on gentle economic growth this
year. The S&P 500 has climbed 2% in April and more than 15% in
2019.
Still, corporate earnings season, which begins in earnest later
this week, will be closely examined for signs of weakness.
Investors were awaiting the International Monetary Fund's latest
world economic outlook, due to be released later Tuesday. In its
January report, the IMF predicted a sharp slowdown in global
growth. Minutes from the Federal Reserve's most recent meeting are
expected Wednesday.
Gentle gains in Europe followed similar moves in Asia, where
Japan's Nikkei 225 rose 0.2% and Hong Kong's Hang Seng Index
climbed 0.3%.
Losses would come against a backdrop of continuing strength for
U.S. equities so far this year, with gains in 2019's second quarter
so far extending those of the year's first three months amid
investor bets on gentle economic growth this year. The S&P 500
has climbed 2% in April and more than 15% in 2019.
Elsewhere, the British pound ticked up 0.1% against the dollar,
as U.K. Prime Minister Theresa May was set to travel to Berlin to
meet German Chancellor Angela Merkel and French President Emmanuel
Macron to discuss the prospect of a long delay to Brexit. Talks
between Mrs. May's government and Jeremy Corbyn, leader of the
opposition Labour Party, continued.
In commodities, Brent crude oil was down 0.2% at $70.97 a
barrel, remaining close to its highest level so far this year, amid
rising supply fears in Libya.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
April 09, 2019 08:19 ET (12:19 GMT)
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