By Investors Hub
The major U.S. index futures are pointing to a lower opening on Wednesday following the notable advance seen over the course of the previous session.
Stocks are likely to move back to the downside as traders continue to worry the trade dispute between the U.S. and China is escalating into a full-fledged trade war.
A report from the South China Morning Post said Chinas is re-examining the entire bilateral economic relationship between the U.S. and China.
The SCMP said Chinese government advisers are highlighting the risk of sourcing critical supplies from an increasingly hostile U.S. following the Trump administration?s recent move to blacklist Chinese tech giant Huawei.
Mei Xinyu, a fellow at the research institute under China?s Ministry of Commerce, told the SCMP that Beijing should prepare for the worst-case scenario to defend its rights in climbing up the global value chain through technological catch-up.
?Even if a deal is reached, it could be torn apart [by President Donald Trump] easily at any time,? Mei said, comparing the current trade talk deadlock to the Panmunjom peace talks during the Korean War.
Potentially adding to the trade concerns, Treasury Secretary Steven Mnuchin recently told CNBC?s Ylan Mui the U.S. has no plans to go to Beijing to resume trade negotiations.
Later in the session, trading may be impacted by reaction to the release of the minutes of the latest Federal Reserve meeting.
The minutes may shed additional light on the outlook for interest rates but could also be viewed as old news considering the constantly shifting developments on the trade front.
With the markets continuing to show intense sensitivity to trade-related news, stocks showed a strong move back to the upside during the trading day on Tuesday after moving mostly lower over the course of Monday?s session.
The major averages ended the day firmly in positive territory. The Dow climbed 197.43 points or 0.8 percent to 25,877.33, the Nasdaq jumped 83.35 points or 1.1 percent to 7,785.72 and the S&P 500 advanced 24.13 points or 0.9 percent to 2,864.36.
The rebound on Wall Street came in reaction to news that the U.S. Commerce Department has temporarily eased trade restrictions on Chinese tech giant Huawei.
The Commerce Department issued a temporary license authorizing specific, limited engagement in transactions involving the export, re-export, and transfer of items to Huawei for 90 days.
Commerce Secretary Wilbur Ross said the temporary reprieve grants “operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services.”
“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” he added.
The move by the Trump administration led U.S. tech giant Google to reverse an earlier decision and announce it will continue to work with Huawei over the next 90 days.
Tech stocks rebounded on the news after falling sharply in the previous session amid reports of companies cutting off supplies to Huawei.
Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing an unexpected drop in existing home sales in the month of April.
NAR said existing home sales dipped by 0.4 percent to an annual rate of 5.19 million in April after plunging by 4.9 percent to a rate of 5.21 million in March.
The continued decrease came as a surprise to economists, who had expected existing home sales to jump by 2.7 percent to a rate of 5.35 million.
Semiconductor stocks turned in some of the market’s best performances on the day after falling sharply in the previous session.
Reflecting the rebound by the sector, the Philadelphia Semiconductor Index spiked by 2.1 percent after plunging by 4 percent on Monday.
Substantial strength also emerged among biotechnology stocks, as reflected by the 2.2 percent jump by the NYSE Arca Biotechnology Index.
Natural gas, steel, computer hardware and oil service stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.
Adedapo Adesanya