Stock-index futures slip as investors await Trump remarks on China

Stock-index futures lost ground early Friday, with equities undercut by worries over a deterioration in U.S.-China relations as investors awaited a news conference by President Donald Trump regarding China’s plans to impose new security laws that would curb Hong Kong’s autonomy.

Meanwhile, Federal Reserve Chairman Jerome Powell is slated to participate remotely in an event at Princeton University at 11 a.m. Eastern.

What are major indexes doing?

Futures on the Dow Jones Industrial Average
fell 83 points, or 0.3%, to 25,374, while S&P 500 futures
were off 6.35 points, or 0.2%, at 3,031.75. Nasdaq-100 futures
lost 17.25 points, or 0.2%, to 9,443.

The Dow
gave up gains late Thursday after Trump announced he would hold a news conference on China, ending down 147.63 points, or 0.6%, at 25,400.64, while the S&P 500
lost 6.40 points, or 0.2%, closing at 3,029.73. The Nasdaq Composite
lost 43.37 points or 0.5%, to end at 9,368.99.

Stocks were still on track for solid weekly gains, however. The Dow ended Thursday on track for a 3.8% weekly rise, while the S&P 500 was up 2.5% and the Nasdaq up 3.3%.

What’s driving the market?

A conflict over China’s efforts to crack down on Hong Kong and end anti-Beijing protests could undercut enthusiasm for stocks, analysts warned, but mild losses for futures indicate investors, while focused on the U.S. response, aren’t convinced U.S.-China relations are set to fall apart.

“We think it would be a significant shock to markets were Trump to announce anything that risked the phase one trade deal,” said Jasper Lawler, head of research at London Capital Group, in a note. “Revoking Hong Kong’s Special Status with the U.S. seems unlikely, It wouldn’t help the people of Hong Kong and would be a self-inflicted wound because it would just limit U.S. company access to China.”

Global equities have rallied this week, lifted by optimism over the easing of lockdowns put in place to contain the COVID-19 pandemic and historic stimulus efforts by the Federal Reserve and other central banks as well as fiscal measures by governments. While economic data remains dismal, stock-market bulls said signs of the contraction bottoming out have helped fuel gains, with investors playing down the threat of a second wave of infections later in the year.

Read:CNN journalist and crew arrested on live TV while covering Minneapolis protests

In U.S. political news, demonstrators clashed with police for a third straight day in Minneapolis amid protests over the death of George Floyd, a handcuffed black man who died while in police custody.

Trump reacted to the violence on Twitter, including a tweet that employed a quote from a former Miami police chief who said, “when the looting starts, the shooting starts.” Twitter on Friday flagged the tweet as having “glorified violence,” just hours after the president signed an executive order threatening to strip the company of protections against liability.

See:Trump executive order to punish social-media platforms is largely toothless, legal experts say

The U.S. economic calendar features data on personal income and consumer spending for April that’s expected to show sharp declines due to the COVID-19 lockdowns. Economists surveyed by MarketWatch, on average, look for income to show a 2.1% drop while spending is forecast to dive by 13%. The PCE core inflation gauge, the Fed’s favorite inflation measure, is expected to register a 0.3% fall.

Data on international trade in goods for April is also due at 8:30 a.m. Eastern, while the May Chicago Purchasing Managers Index is set for release at 9:45 a.m. Eastern. A final May reading on the University of Michigan’s consumer confidence index is scheduled for 10 a.m. Eastern; it’s expected to rise to 73.7 versus an April level of 71.8.

Which companies are in focus?
  • Shares of social-network companies were expected to remain in focus. Shares of Twitter Inc.
    were off 0.3% in premarket action, after a drop of more than 4% on Thursday. Facebook Inc.
    shares were up 0.1%.

  • Shares of Inc.
    were 2.9% lower in premarket action. The enterprise-content platform late Thursday reported fiscal first-quarter results that were largely in line with Wall Street estimates but offered guidance that fell short.

  • Costco Wholesale Corp.
    shares were 2% lower ahead of the bell after the retailer late Thursday delivered results that missed Wall Street expectations for its fiscal third quarter, during which it spent nearly $300 million in wages and extra sanitation amid the coronavirus pandemic.

  • Shares of Dell Technologies Inc.
    were up nearly 6% in premarket trade after it announced following Thursday’s close that the COVID-19 pandemic has boosted its business in certain sectors.

  • Cisco Systems Inc.
    late Thursday announced plans to acquire ThousandEyes, a security-software company, reportedly for close to $1 billion. San Francisco-based ThousandEyes has raised more than $100 million in venture capital to develop software that monitors how a company’s applications are being used on the internet. Shares were up 0.3% in premarket trade.

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Volkswagen pumps 2 billion euros into China electric vehicle bet By Reuters

© Reuters. A new logo of German carmaker Volkswagen is unveiled at the VW headquarters in Wolfsburg

By Yilei Sun and Julie Zhu

BEIJING/HONG KONG (Reuters) – Volkswagen AG (DE:) plans to boost its electric push in China, the world’s biggest auto market, by pumping 2.1 billion euros in two Chinese electric vehicle players.

The deals come as global rivals such as General Motors (N:), Toyota (T:) and Tesla Inc (O:) seek to expand electric sales in the Chinese car market.

Volkswagen said it will invest 1 billion euros to take a 50% stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors) (SS:), also taking full management control of the its existing electric vehicle joint venture with JAC by raising its stake to 75% from 50%.

Volkswagen’s China chief Stephan Woellenstein told reporters on Friday the venture planned to revamp one existing JAC plant and launch its first electric model based on its MEB platform, an architecture enabling efficient production of various EV models, in 2023.

The joint venture will launch five more electric models by 2025, when the German giant aims to sell 1.5 million new energy vehicles (NEV) – including battery electric cars as well as plug-in hybrid and hydrogen fuel-cell vehicles – a year in China.

In a separate transaction, Volkswagen will pay 1.1 billion euros to acquire 26.5% of Guoxuan High-tech Co Ltd (SZ:), a maker of electric vehicle batteries, becoming its biggest shareholder. Volkswagen said Guoxuan, based in Hefei like JAC, will supply batteries to its EV models in China.

Woellenstein said Anhui province, where Hefei is located, will be Volkswagen’s EV manufacturing hub in China. The Wolfsburg-based automaker has not changed its EV strategy in China after the global gasoline market tumbled, he said.

He added China’s overall auto sales in the second half of this year will be level with same period last year. Volkswagen China’s full-year sales will be lower than last year due to the sales loss in the first months.

Reuters exclusively reported on Wednesday that VW was in final talks to invest in the two companies.

China has set a target of 25% of 2025 annual vehicle sales to be made up of NEVs. More than 25 million vehicles were sold in China last year.

Friday’s moves also make Volkswagen the latest foreign automaker to increase ownership of operations in China since the government started to relax rules in 2018, with German peer BMW AG (DE:) quick to take control of its main local venture.

Tesla last year became the first foreign automaker to wholly own a car plant in China.

Volkswagen also has ventures with state-owned China FAW Group Corp Ltd [SASACJ.UL] and SAIC Motor Corp Ltd (SS:).

Shares in both JAC and Guoxuan climbed their maximum daily limit of 10% on Friday morning. Volkswagen’s shares fell 3%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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European shares step back, Trump’s China response awaited By Reuters

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

(Reuters) – European shares pulled back on Friday as market participants turned their focus to Washington’s response to the Chinese parliament’s approval of a national security law for Hong Kong, but major indexes were on course to finish May with solid gains.

The pan-European STOXX 600 index () fell 0.9% by 0709 GMT, with U.S. President Donald Trump due to announce his policy moves that could escalate tensions between Washington and Beijing.

Automobiles and parts makers () led declines with a 2.5% drop, while travel & leisure () and banks () fell more than 2% each.

Still, hopes of a global economic recovery as policymakers unleashed stimulus programmes and several countries emerged from lockdowns put the STOXX 600 on course for a 3.6% monthly gain.

Hugo Boss AG (DE:) fell 4.4% after Jefferies (NYSE:) downgraded the stock to “hold”, while Renault SA (PA:) slid 4.5% on news that it was launching talks with unions to restructure several French car plants and confirmed plans to cut around 15,000 jobs worldwide.

Coffee maker JDE Peet’s (AS:), one of the few big companies to go public during the coronavirus crisis, jumped 11.3% at the start of trading on Euronext in Amsterdam.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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S&P Turns Negative as Trump Announces News Conference on China By

© Reuters.

By Yasin Ebrahim – The S&P 500 gave up gains on Thursday, easing from near three-month highs, on rising U.S.-China tensions after President Donald Trump said he would hold a news conference on Friday relating to China just as Beijing imposed a new security law in Hong Kong that threatens the city’s autonomy. 

The fell 0.31%, or 79 points, the fell 0.04%, while the slipped 0.26%.

China’s National People’s Congress approved a national security law for Hong Kong that will crack down subversion, succession, terrorism, and activities by foreign forces that interfere in Hong Kong. The move has been widely condemned with governments of the U.S., Australia, Canada, and the U.K. expressing their concern. 

Just a day earlier, U.S. Secretary of State Mike Pompeo said that Hong Kong no longer had a high degree of autonomy from China, throwing Hong Kong’s status as a trade hub into doubt and raising concerns that Washington and Beijing are headed on a collision course just months after both sides agreed a truce on trade.

The U.S. Labor Department reported that workers filed 2.123 million new last week, just above forecasts of 2.1 million, but below the prior week’s downwardly revised 2.446 million.

In another stark reminder of the Covid-19 pandemic’s impact on the economy, revised government data showed contracted at an annual pace of 5% rather than 4.8%.

The weaker backdrop for the economy, however, has had little sway on the broader market, with many betting on a second-half economic rebound amid optimism over the progress on reopening the economy so far.

As efforts to reopen the economy continue, healthcare stocks have caught a bid, with Moderna and Gilead (NASDAQ:) leading the pack of drugmakers in the race to find a Covid-19 cure.

Moderna (NASDAQ:) jumped 6% after reaching a deal with CordenPharma for the supply of volumes of the lipids used to produce its coronavirus vaccine candidate candidate mRNA-1273.

Tech, meanwhile, also led the gains on Wall Street, as social media stocks pared losses, which followed reports that President Donald Trump is set to sign an order seeking to limit the power of social media platforms like Twitter Inc (NYSE:) and Facebook (NASDAQ:).

Financials gave up some of their gains from earlier this week as investors seemingly took profit on bank stocks, with JPMorgan (NYSE:NYSE:), Bank of America (NYSE:NYSE:) and Citigroup (NYSE:C) trading below the flatline.

The earnings front, meanwhile, also supported sentiment amid mostly bullish quarterly reports from corporates.

Discount retailer Dollar Tree Inc (NASDAQ:) rose 12% after its first-quarter earnings topped consensus estimates as panic buying during the height of the pandemic demand boosted growth.

Cloud-based company Workday (NASDAQ:) surged 8% after first-quarter revenue beat estimates, rising 23% on strong demand for its cloud services offering.

Elsewhere, Boeing (NYSE:) was up 0.45% after detailing plans to cut 13,000 jobs and confirming that it would production of its maligned 737 MAX jets. 

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Hong Kong shares drop amid tensions with China

BANGKOK (AP) — Asian stocks were mixed after an upbeat open on Thursday, as investors pinned their hopes on an economic rebound from the coronavirus crisis.

Shares rose in Tokyo and Sydney, but fell in China and Hong Kong, where tensions are flaring over Beijing’s effort to exert more control over the former British colony.

The most recent developments are another thorn in a relationship already testy over China’s handling of the early stages of the coronavirus outbreaks and over longstanding trade and other antagonisms.

Two pro-democracy lawmakers were ejected from Hong Kong’s legislative chamber Thursday morning, at the start of a second day of debate on a contentious bill that would criminalize insulting or abusing the Chinese national anthem.

Hong Kong pro-democracy activists are urging the international community to pressure Beijing to withdraw proposed national security legislation that could further reduce the semi-autonomous Chinese territory’s civil liberties.

On Wednesday, U.S. Secretary of State Mike Pompeo told Congress the Trump administration no longer regards Hong Kong as autonomous from mainland China. That sets the stage for the U.S. to withdraw the preferential trade and financial status Hong Kong has held since it reverted to Chinese rule 23 years ago.

While Hong Kong’s role as regional trading center and financial hub has been to a large extent sidelined by developments on the Chinese mainland, removing its special status would be a huge blow to businesses located in the city because of its independent financial and legal systems.

With U.S. Commerce Secretary Wilbur Ross saying President Donald Trump has a “’whole menu’ of options, the market is on edge to hear exactly what those measures are, and how China absorbs them,” Chris Weston of Pepperstone said in a commentary.

“This is a risk for markets and the situation is clearly fluid — one questions if the equity markets are too complacent here?” Weston said.

Hong Kong’s Hang Seng index
lost 1.8%, while the Shanghai Composite index
declined 0.4%.

Tokyo’s Nikkei 225 index
advanced 1.9%, lifted by the latest, $1.1 trillion infusion of stimulus for its moribund economy. India’s Sensex
gained 0.9% to 31,876.69 and the S&P ASX 200
in Sydney climbed 1.3%.

But South Korean shares declined after health authorities reported 79 new cases of coronavirus in the latest setback for the country’s recovery from the pandemic. The Kospi
lost 0.4%.

Many, at least 69 infections so far, were linked to workers at a massive warehouse operated by local e-commerce giant Coupang. Health authorities say the company likely didn’t enforce preventive measures such as masks at the facility in Bucheon, near Seoul, and may have had employees working even when sick.

That news undid any boost from the South Korean central bank’s decision to lower its policy rate to an all-time low of 0.5% to soften the pandemic’s shock to the country’s trade-dependent economy.

The Bank of Korea has said the economy may shrink for the first time in 22 years. Its rate cut followed another two months ago, which was its first since 2008.

U.S. shares advanced overnight, with the S&P 500
closing over 3,000 points for the first time since early March. Financial, industrial, department store chains and health care stocks accounted for a big slice of the gains.

The movements followed up on strong gains in Europe, where authorities proposed a 750 billion euro ($825 billion) recovery fund to help carry the region through the recession caused by the response to the coronavirus pandemic.

The benchmark S&P 500 ended a choppy day of trading up 1.5% at 3,036.13. The Dow Jones Industrial Average
jumped 2.2%, to 25,548.27, its first close above 25,000 points since March.

The Nasdaq composite
recovered from an early slide, adding 0.8% to 9,412.36. Small company stocks, which have lagged the broader market this year, were big gainers, with the Russell 2000 index
surging 3.1% to 1,436.36.

“A steady stream of economic revival indications underpinned the latest rally on Wall Street, inducing the market to brush aside simmering tensions between the U.S. and China,” Jingyi Pan of IG said in a commentary.

Some big technology companies that had been stalwarts during the market’s sell-off took a step back Wednesday, which kept the market’s gains in check in the early going. Microsoft
bounced back from a loss to finish with a gain of 0.1%, but Amazon
fell 0.5% and Nvidia
dropped 2.2%. All three remain up at least 15% for the year so far.

The S&P 500 is now down only 10.3% from its record high in February, before it plunged nearly 34% in March on sell-offs propelled by worries over the coming recession.

Gains first driven by massive stimulus from the Federal Reserve and Capitol Hill have accelerated recently on hopes growth will revive as governments ease up on business-shutdown orders meant to slow the spread of the coronavirus.

In other trading, bond yields were mixed. The yield
on the 10-year Treasury held steady at 0.69%.

U.S. crude oil
for delivery in July lost $1.43 to $31.38 per barrel in electronic trading on the New York Mercantile Exchange. It fell $1.54 on Wednesday to settle at $32.81 per barrel.

July Brent crude
, the international standard, dropped $1.04 to $34.41 per barrel.

The dollar
bought 107.78 Japanese yen, up from 107.72 yen late Wednesday. The euro
rose to $1.1010 from $1.1006. .

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