The big gains in August are in the past with all three major indexes extending losses in afternoon trade. The US and Canada are scheduled to resume tricky NAFTA trade negotiations Wednesday, while tariffs on US$200bn of Chinese goods could be put in place as soon as Thursday.
The levies that Washington fired at Beijing this summer and the Asian nation’s swipes back in equal measure, have US businesses bracing for a new era of hindered trade between the world’s two largest economies.
The Dow Jones Industrial Average index shed 64.12 points, or 0.25% to 25,900, led lower by Nike Inc, Verizon Communications, and 3M Company.
The S&P 500, meanwhile, slumped by 9.67 points to 2,891.85, or 0.33%, to 2,892.02 dragged back by a 8.5% drop in Seagate Technology PLC, and 6.6% fall in Western Digital Corp.
The tech-laden Nasdaq, meanwhile, fell 29.73 points, or 0.37% to 8,079.72, led lower by Seagate Technology, JD.com and Western Digital Corp. Shares of Amazon briefly hit an all time high of US$2,050.27 striking the US$1trn market cap milestone.
10:00 A.M: Wall Street kicks off September by opening lower as trade battles hang over markets
US stocks kicked off trading in September by opening lower Tuesday as the fierce trade battles between the US and its key trading partners hung over the markets.
Investors have responded poorly to the news that Canada has thus far failed to join the US and Mexico’s new trade deal, which supplants the North American Free Trade agreement.
Over the weekend, President Trump further inflamed the trade spat by saying via twitter that there is no “political necessity to keep Canada in the new NAFTA deal”. Trump went on to call NAFTA one of the “WORST trade deals ever made.”
There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off...
— Donald J. Trump (@realDonaldTrump) September 1, 2018
The Dow Jones Industrial Average index shed 102 points to hover at 25,870, led lower by Verizon Communications, Nike, Microsoft, Caterpillar and Walt Disney.
The S&P 500, meanwhile, slumped by 9 points to 2,892, dragged back by a 8.2% drop in Seagate Technology PLC, which came after the stock had its price target slashed to US$45 and was downgraded by an Evercore ISI analyst to underperform from in-line.
The tech-laden Nasdaq, meanwhile, was also in the doldrums, falling by 64 points to 8,045, led lower by Seagate Technology, JD.com, Western Digital Corp and Cognizant Technology Solutions Corp.
Elsewhere, the Russell 2000 index of small-cap stocks bucked the trend to trade 8.4 points higher at 1,741.
Up in Canada, Toronto’s TSX shed nearly 56 points to 16,207, on the country’s failure to resurrect NAFTA.
The US remains entangled in its trade spat with China and looks set to levy another US$200bn in tariffs on Chinese imports. The US has already slapped tariffs on as much as US$50bn in Chinese goods while China has moved to retaliate by imposing its own levies on US goods.
7:09 AM: Wall Street set for mixed start to September as investors have much to mull over
Wall Street shares look set to start September mixed but Nasdaq futures are up over 12 points, the index having had a very good August.
Share rises in the likes of titans Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Cisco (NASDAQ:CSCO), and Nvidia (NASDAD:NVDA) meant the US benchmark index hit record highs three times in the final week of last month.
Apple also marked the month by passing the eye-watering US$1 trillion market cap, the first time that had happened for a U.S. publicly-traded company.
Nasdaq crosses 8000 threshold for first time. #IWecon #economy https://t.co/abMhUP3H6N
— IWF (@IWF) 3 September 2018
On Friday (August 31), the Dow Jones Industrial Average closed down around 22 at 25,964. The Nasdaq added 21 to 8,109, while the S&P 500 gained 0.39 points to finish at 2,901.
Dow futures on Tuesday are down eight points, while Nasdaq futures are up 13 points, while the S&P 500 is up 2.5 points.
In Europe, stocks are struggling. The FTSE 100 is off around ten points, while the German Dax and French CAC 40 are down 81 points and 51 points respectively.
Overnight, the Nikkei 225 shed around 10.5 points at 22,696, while the Shanghai Composite Index added nearly 30 points to stand at 2,750.
Dean Popplewell, analyst at Forex firm Oanda, noted: "In the last week of August, it was trade and tariff wars along with EM currency capitulation that were the driving forces behind asset prices."
Also in the mix this month is G10 central banks and geopolitical risks, he added.
"Topping investors’ agenda this week is the Sino-U.S trade dispute and Canada Nafta talks, which are both threatening to escalate along with EM fallout as Argentina’s austerity measures shake emerging markets."
And let’s not forget President Trump may announce the start of tariffs on as much as over US$200bn on China products as soon as Thursday.