Ways2Capital Reviews : US Futures Slip Over Acrimonious G7 Meet

US stock futures were lower a day after the Group of Seven meeting ended in acrimony, but the moves were small and reprised a recent pattern of quiet reactions to trade dust-ups.

Contracts on the S&P 500 fell 0.2% at 7:14 a.m. In Singapore. Nasdaq 100 futures lost 0.3%.

A persistent concern in markets for months, trade tensions erupted again over the weekend as US President Donald Trump retracted support for a joint G-7 statement while complaining about comments made by Canada’s Justin Trudeau about tariffs. White House economic adviser Larry Kudlow said Sunday that the sides had been close to a deal to revise the North American Free Trade Agreement before the war of words escalated.

“We think investors are coming around to the idea that the trade tensions are about posturing and theatrics to get the upper hand in negotiations,” said Brian Jacobsen, multi-asset strategist at Wells Fargo Asset Management. “Of course, the risk is that the parties paint themselves into corners and are too obstinate to back away from economically harmful policies.”

The US president has since arrived in Singapore for his summit with North Korea leader Kim Jong Un. Trump last week said it’s possible he could sign an agreement with Kim to formally end the Korean War.

“There’s a chance that optimism over North Korea may offset concern over trade,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland." There may be some hope that if the US can negotiate with North Korea successfully, then it can negotiate a trade deal with Canada.”

While market reactions to trade headlines had been quieter of late, the on-again, off-again war over international commerce has been a costly one for US investors, according to research published last week by JPMorgan Chase & Co. The bank’s derivatives analysts say about $1.25 trillion has been lopped from US equity prices since March.

Stocks have still managed to rise for three straight weeks, with gauges of price volatility easing to levels last seen in January. Besides trade fallout and the Singapore summit, investors this week will see a key report on consumer inflation and hear Federal Reserve Chairman Jerome Powell speak at a press conference following a Federal Open Market Committee decision on interest rates.
Source: Bloomberg
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