US equity futures edge down amid escalating China tension

Iseq declines by almost 2% with banks and housebuilders amongst losers

Photograph: iStock

Photograph: iStock

 

US equity futures edged down on Friday amid concern over escalating Sino-American tensions and worries the recovery in the world’s largest economy has stalled. Five-year Treasury yields touched an all-time low before bouncing back.

Shares in China bore the brunt of losses as Beijing ordered the US to shut a consulate in a tit-for-tat retaliation. S&P 500 futures and European stocks came off their session lows.

American Express dropped in pre-market trading after missing revenue estimates. Intel slumped more than 10 per cent in the pre-market after warning of a production delay, while rival chipmaker Advanced Micro Devices gained.

Gold closed in on $1,900 an ounce, nearing an all-time high. The dollar extended this week’s slide, and the offshore yuan dipped. Core European bonds fell after US Treasuries turned lower.

Beijing’s latest move further strains the increasingly fraught relationship with the US, which forced China to leave its mission in Houston earlier this week. The two superpowers have also recently clashed on trade and early handling of the coronavirus, raising fears of a protracted conflict.

“We won’t be surprised if there is some sell-off because investors are shifting focus back to this geo-political tension,” Janet Mui, an investment director at Brewin Dolphin, said on Bloomberg TV.

Also hitting sentiment was the first uptick in US jobless claims since March on Thursday. While European manufacturing data for July showed a return to growth, firms cut jobs for a fifth straight month. Earnings beats keep rolling in, though they’re coming against low expectations.

Elsewhere, European shares fell as global sentiment soured after Beijing ordered United States to close its consulate in a Chinese city.

The pan-European Stoxx 600 index fell 1.5 per cent, on track for its biggest one-day drop in a month, pushing it into losses for the week.

The Iseq All-Share index in Dublin fell further, dropping by 1.9 per cent by 8:30am. Housebuilders and banks were among losers, reversing gains made earlier in the week.

Technology stocks

On the wider Stoxx index, technology stocks led losses following a sell-off in US peers overnight, while the China-sensitive basic materials sector lost 1.9 per cent.

British Gas owner Centrica surged 30 per cent to top the Stoxx 600, despite posting lower first-half earnings as it announced plans to sell its North American business Direct Energy to NRG Energy for $3.63 billion.

Norwegian energy company Equinor rose 0.5 per cent after reporting an 89 per cent drop in operating profit, while analysts had expected a loss.

The world’s biggest lighting maker, Signify jumped 4.5 per cent after a 62 per cent jump in second-quarter net profit, and on plans to pay down €350 milllion in debt this year. – Agencies