By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to see further downside following the sell-off seen in the previous session.
The downward momentum on Wall Street comes amid continued concerns about the escalating U.S.-China trade war and rising tensions in Hong Kong.
The geopolitical concerns have led traders to seek safe haven assets such as U.S treasuries, resulting in a slump in U.S. bond yields.
The yield on the benchmark ten-year note is threatening to drop below the yield on the two-year note, which is widely seen as indicator of an impending recession.
Stocks moved sharply lower over the course of the trading session on Monday, adding to the losses posted last week. The major averages came under pressure early in the session and slid more firmly into negative territory as the day progressed.
While the major averages climbed off their worst levels going into the close, they still posted steep losses on the day. The Dow plunged 391.00 points or 1.5 percent to 25,896.44, the Nasdaq tumbled 95.73 points or 1.2 percent to 7,863.41 and the S&P 500 slumped 35.96 points or 1.2 percent to 2,882.69.
The sell-off on Wall Street came amid worries about a prolonged trade war between the U.S. and China after President Donald Trump recently indicated he feels no sense of urgency to resolve the dispute.
Trump told reporters last Friday that he is “not ready to make a deal” with China and suggested the U.S. could skip the next round of trade talks in September.
“We’ll see whether or not we keep our meeting in September. If we do, that’s fine. If we don’t, that’s fine,” Trump said. “But it’s time that somebody does what we’re doing.”
Trump denied that Americans are paying the price for his trade war with China, arguing that Beijing’s efforts to depress their currency prove that the Chinese are “paying for it.”
“I want them to do well. But as of this moment, they’re having the worst year that they’ve had in many, many years ? in decades,” he added. “And really, we’re just bringing the system back into order.”
Concerns about the impact of increasingly violent protests in Hong Kong also weighed on stocks, with the Hong Kong International Airport canceling all departing flights due to the disruption caused by protesters.
The pro-democracy demonstrations in Hong Kong have intensified following allegations of unnecessary police violence on Sunday.
The geopolitical concerns increased the appeal of safe haven assets like bonds, resulting in a steep drop in U.S. treasury yields. The yield on the benchmark ten-year note tumbled to its lowest closing level in almost three years.
Steel stocks turned in some of the market’s worst performances on the day amid concerns about the impact of the U.S.-China trade war.
Reflecting the weakness in the sector, the NYSE Arca Steel Index plunged by 3.1 percent to its lowest closing level since November of 2016.
The drop in bond yields also contributed to considerable weakness among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index slumping by 2.2 percent and 2.1 percent, respectively.
Transportation, biotechnology, and chemical stocks also saw significant weakness, moving lower along with most of the other major sectors.
Adedapo Adesanya