Stock Futures Lifted By Upbeat Trade Developments

The U.S. and EU might mutually agree to a 'zero tariff' policy on imported cars

Managing Editor
Jul 5, 2018 at 9:20 AM
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Fresh off the mid-week holiday, stocks are pointed confidently higher this morning, as investors finally receive a dose of good news on the global trade front. Dow Jones Industrial Average (DJI) futures are trading nearly 200 points above fair value, after a report surfaced that the U.S. is considering backing off plans to impose more tariffs against European Union (EU) automakers, if the EU bloc eliminates its own duties on American cars. On the other hand, tariffs against China are expected tomorrow, when the U.S. imposes duties on $34 billion worth of goods.

Elsewhere, investors are digesting weaker-than-expected numbers from ADP's private-sector employment report -- often seen as a precursor to tomorrow's monthly jobs report from the Labor Department. Later today, traders will eye the the latest Fed meeting minutes.

Continue reading for more on today's market, including: 

  • The volatility signal flashing for the first time since 2009, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.
  • 3 airline stocks downgraded on trade war risk.
  • Buy calls on Exact Sciences stock, if history is any indicator.
  • Plus, Netflix jumps into the India market; Tesla gets the auto bump; and Boeing joins forces with Brazilian airliner.

Stock Futures Chart July 5

5 Things You Need to Know Today

  1. The Chicago Board Options Exchange (CBOE) saw 470,195 call contracts traded in the shortened session Tuesday, compared to 312,771 put contracts. The single-session equity put/call ratio jumped to 0.67, while the 21-day moving average remained at 0.57.
  2. Netflix, Inc. (NASDAQ:NFLX) stock is up 1.2% in electronic trading, after the firm premiered its first original series in India yesterday. The Bollywood scripted series represents efforts from the streaming giant to expand into emerging markets, battling Amazon.com (AMZN). In addition, Netflix is reportedly testing a new "Ultra" subscription tier. Netflix stock has rallied 167% in the past year, and scored a record high of $423.20 on June 21. 
  3. Tesla Inc (NASDAQ:TSLA) stock is up 1% ahead of the bell, as automakers get a boost from reports President Trump could suspend more tariffs on European car imports, if the currency bloc lifts tariffs on U.S. autos. As of Tuesday's close, TSLA stock was trading just below its year-to-date breakeven point, and breached its 200-day moving average amid reports the company eliminated a standard brake test in its efforts to meet Model 3 production goals. 
  4. Shares of Boeing Co (NYSE:BA) are up 1.2% in electronic trading, after the aerospace giant agreed to establish a joint venture with Brazilian airliner Embraer (ERJ) for commercial aviation. Boeing will own 80% of the $4.75 billion venture. After soaring to a record high of $374.48 on June 7, Boeing shares pulled back, although the dip has been contained by their 160-day moving average. 
  5. Weekly jobless claims, the MBA mortgage index, the Fed's balance sheet, the holiday-delayed crude inventories report, and the Institute for Supply Management's (ISM) non-manufacturing index all come out today. There are no notable earnings releases.

stock market news july 5

Asian Markets Drop, Europe Boosted By Tariff Talk

It was a negative finish for Asian stock markets today, as traders lost their appetite for equities and other risky assets ahead of the expected July 6 implementation of U.S. tariffs on $34 billion in Chinese goods. China's Shanghai Composite paced the decline, giving up 0.9% to close at new two-year lows. Elsewhere in the region, Japan's Nikkei gave up 0.8%, South Korea's Kospi lost 0.4%, and Hong Kong's Hang Seng ended 0.2% lower.

Conversely, European stocks are firmly higher at midday. Automakers are leading the charge, boosted by reports that the U.S. and EU might mutually agree to a "zero tariff" policy on imported cars. Daimler is up 3.4% in Frankfurt, while BMW has also tacked on about 3%. At last check, Germany's DAX has gained 1.6%, France's CAC 40 is 1.3% higher, and London's FTSE 100 has advanced 0.6%.

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