Lower Open Expected For US Markets: Oil Price Falls

Lower open likely for the Wall Street Monday after key future indices in the U.S. market were looking down. Market mood has been hit by rising worries on the U.S trade war with China.

The expanding unrest stemming from Hong Kong protests on Monday led to the cancellation of all flights from the Hong Kong airport, adding more to the anxiety.

At 6 a.m. ET, Dow Jones futures lost 200 points and indicated a negative open of about 190 points while futures on the S&P and Nasdaq were also down.

Market participants are watching the dollar/yuan exchange rate closely after the trade war expanded to currency.

Last week, China’s yuan fell below the 7-per-dollar level first time in a decade forcing the U.S. Treasury Department to label China as a currency manipulator.

President Donald Trump on Friday said the U.S. is not ready to strike a trade deal with China.

“China wants to do something, but I’m not doing anything yet,” Trump said adding that “after 25 years of abuse. I’m not ready so fast.”

Goldman Sachs also said there is no scope for a trade deal with China before the 2020 U.S. presidential election.

The two sides are expected to resume trade negotiations in Washington in early September. The new 10 percent tariff on an additional $300 billion worth of Chinese goods will take effect on Sept. 1.

On the data front, the Federal Budget for July will be published at around 2 p.m. ET.

At the earnings front, Sysco and Barrick Gold will publish quarterly earnings before the bell. Bloom Energy will report after the market close.

Oil price dips

Oil prices dipped on Monday amid worries about an economic slowdown and the unabated Sino-U.S. trade war that led to a cut in the growth outlook for oil demand.

Brent crude futures fell 0.3 percent to $58.35 a barrel by 0249 GMT, from their previous settlement. The U.S. West Texas Intermediate (WTI) futures were down by 0.4 percent to $54.29 per barrel from their last close.

In the last week, Brent lost more than 5 percent and WTI 2 percent.

“Oil prices are falling at the start of the trading week due to lower demand forecasts published last week and pessimism about a U.S.-China trade deal,” commented Alfonso Esparza, senior market analyst at Oanda in Toronto.

Meanwhile, in a significant foreign investment in the Indian oil sector, Saudi Aramco will buy a 20 percent stake in the Indian conglomerate Reliance Industries’ oil and chemicals business.

The deal worth $15 billion will give the Saudi giant great diversity ahead of its expected IPO. For India, the deal is one of the largest foreign direct investments.

According to Reliance Industries Chairman Mukesh Ambani Aramco will also supply Reliance’s Jamnagar refinery 700,000 barrels of oil a day. The RIL refining complex can process 1.4 million barrels per day.

Asian markets up, Europe slips

The stock market news in the Asia Pacific was positive as the markets closed higher on Monday and recovered from the past week’s volatility.

However, European stocks gave up early gains on Monday as volatility haunted global markets. The pan-European Stoxx 600 turned to the flat line after jumping 1 percent in early trade.

Chinese markets traded higher on Monday. The Shanghai Composite jumped 1.45 percent while Hong Kong’s Hang Seng index inched up fractionally.

Markets in Japan, India, and Singapore were closed for public holidays.

Australia’s benchmark ASX 200 moved up marginally. South Korea’s Kospi jumped 0.23 percent after reversing some losses.

“Trade tensions continued to drive financial market moves going into the end of the week, with markets very sensitive to reports on the US-China relationship,” Jack Chambers from ANZ Research said in a note.

Gold price steady

Gold prices were steady in the vicinity of $1,500 per ounce level as the U.S.-China trade conflict escalated and fears of a global economic slowdown also expanded.

Spot gold was at $1,496.99 per ounce as of 0114 GMT. The U.S. gold futures were flat at $1,508.50 an ounce.