Dow Futures Edge Higher as Cautious Investors Track China's Next Trade War Move
Frankfurt (May 30) Global stocks edged cautiously higher Thursday, while Wall Street futures attempted to bounce from multi-month lows, but suggestions that China is ready to dig in for a protracted trade dispute with the United States has investors favoring safe-haven assets heading into the final trading days of the month.
U.S. stocks have retreated more than 5.5% so far this month, with tech bellwethers such as Apple (AAPL - Get Report) and Tesla (TSLA - Get Report) slumping 16% and 20% respectively as investors worry that Beijing's threat of tariff and trade reprisals could upend China-focused revenues and disrupt sector supply chains.
The China Daily newspaper added to those concerns Thursday, adding its voice to a state-lead media effort to bolster the nation's position in what now looks to be a prolonged trade war between the world's two biggest economies.
"It would be naive to think that China does not have other countermeasures apart from rare earths to hand," the paper said, referring to yesterday's threat from the People's Daily newspaper that the government could ban the export of the crucial metals and alloys. "As Chinese officials have reiterated, they have a 'tool box' large enough to fix any problem that may arise as trade tensions escalate, and they are ready to fight back 'at any cost'."
Asia stocks, however, managed to eek out modest gains beyond the China borders, with the MSCI ex-Japan benchmark rising 0.21%, while China's Shanghai Composite fell 0.3% and the Heng Seng slipped 0.35%.
Early indications from U.S. equity futures suggest modest gains on Wall Street, following last night's slump which took the three major benchmarks to two-month lows, with contracts tied to the Dow Jones Industrial Average indicating a 50 point advance and those linked to the S&P 500 guiding for a 5.7 point bump for the broader benchmark.
Ray Dalio, the billionaire investor and co-chairman of Bridgewater Associates, called the trade standoff an "ideological conflict" that's created a "risky time" for the global economy.
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