Stocks – U.S. Futures Lower as China Tensions Ramp Up

This post was originally published on this site – U.S. stocks are set to open lower Monday as the war of words between the U.S. and China over the coronavirus escalated, threatening the resumption of last year’s trade dispute.

At 7 AM ET (1100 GMT), S&P 500 Futures traded 25 points, or 0.9%, lower, Nasdaq 100 Futures down 75 points, or 0.9%. The Dow Futures contract fell 276 points, or 1.2%.

The latest outburst came from Secretary of State Mike Pompeo on Sunday, who said there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.

Late last week President Donald Trump threatened new tariffs on Beijing, who he blames for the spread of the virus.

The two economic superpowers signed phase one of a trade deal only in January, seemingly bringing to an end a costly trade war which had curtailed economic growth globally.

The corporate earnings season continues this week, although Monday is relatively quiet. 

Instead, the airline sector will be in focus after billionaire investor Warren Buffett said over the weekend that his company Berkshire Hathaway (NYSE:BRKa) had sold all of its shares in the four largest U.S. airlines.

Speaking at the annual shareholders’ meeting, Buffett said “the world has changed” because of the coronavirus.

Berkshire Hathaway had an 11% stake in Delta Air Lines (NYSE:DAL), 10% of American Airlines (NASDAQ:AAL), 10% of Southwest Airlines (NYSE:LUV), and 9% of United Airlines (NASDAQ:UAL), according to its annual report and company filings.

There was some positive news Monday, as JPMorgan (NYSE:JPM) analysts raised their rating on U.S. stocks to “neutral”, saying they expected equity markets globally to consolidate from current levels, while not ruling out more weakness.

Turning to economic data, the latest U.S. factory orders data are expected to show a fall of 9.7% in March at 10 AM ET (1400 GMT). 

However, the main focus will be on the nonfarm employment report for April on Friday, with economists forecasting an astonishing loss of 21 million jobs for the month.

Oil futures retreated Monday, with the potential of a trade war and a freshhit to global demand weighing.

At 6:55 AM ET, U.S. crude June futures traded 5% lower at $18.79 a barrel. The international benchmark Brent contract fell 2.5% to $25.77.

Elsewhere, gold futures rose 0.8% to $1,714.80/oz, while EUR/USD traded at 1.0934, down 0.5%.