Wall Street had a really rough Monday as the trade bloodbath on stocks and commodities continued. The dollar’s performance was mixed as it lagged behind the European currencies while staying in the lead against the yen and comdolls.
- U.S. new home sales up from 646K to 689K vs. 665K forecast
- U.S. to block firms with at least 25% Chinese ownership from buying U.S. tech companies?
- Treasury Secretary Mnuchin: Trade restrictions apply to “all countries that are trying to steal our technology”
- White House adviser Navarro: Investment restrictions won’t be global
More trade troubles brewing
Wall Street traders woke up on the wrong side of the bed this Monday as headlines continued to focus on potentially worsening trade troubles.
Recall that the latest episode from the previous week ended in an exchange of threats between the the U.S. government and the E.U. on the issue of tariffs on automobile imports.
The latest development, according to a government source over the weekend, is that the Trump administration is looking into drafting legislation to prevent firms with at least 25% Chinese ownership from acquiring U.S. tech companies.
Fears of retaliatory measures from China were once again ignited after Treasury Secretary Mnuchin tweeted:
On behalf of @realDonaldTrump, the stories on investment restrictions in Bloomberg & WSJ are false, fake news. The leaker either doesn’t exist or know the subject very well. Statement will be out not specific to China, but to all countries that are trying to steal our technology.
— Steven Mnuchin (@stevenmnuchin1) June 25, 2018
Oh, that’s comforting. Wall Street responded by waving red flags:
- Dow 30 index slumped 328.09 points to 24,252.80 (-1.33%)
- S&P 500 index is down 37.81 points to 2,717.07 (-1.37%)
- Nasdaq is down 160.81 points to 7,532.01 (-2.09%)
Come to think of it, the losses were already pared after White House adviser Navarro soothed market fears somewhat in clarifying in a CNBC interview that the investment restrictions would only target China.
Major Market Mover(s):
Dollar weakness continued to work in the euro’s favor, as the shared currency was coming from a positive run in the earlier session thanks to good data.
EUR/USD is up from 1.1650 to a high of 1.1702, EUR/JPY advanced from 127.56 to a high of 128.81, EUR/GBP kept climbing to .8815, and EUR/AUD is up to 1.5810.
Among the commodity currencies, the oil-related Loonie was the biggest loser since it started to feel the weight of the OPEC’s decision to increase production levels.
USD/CAD ticked higher from 1.3284 to a high of 1.3325, CAD/JPY slumped to a low of 82.20, EUR/CAD rose from 1.5475 to 1.5587, and NZD/CAD spiked to a high of .9226.
Watch Out For:
- 5:00 am GMT: BOJ core CPI y/y (gain from 0.5% to 0.6% expected)