Stock Futures Plummet as U.S.-China Tensions Spike

China let its currency fall to decade-plus lows versus the dollar

by Patrick Martin

Published on Aug 5, 2019 at 9:17 AM
Updated on Aug 5, 2019 at 9:22 AM

Stocks are staring at a sharply negative open, with Dow Jones Industrial Average (DJI) futures trading more than 350 points below fair value as Wall Street reacts to the latest escalation between the U.S. and China. Last night, China allowed the yuan to fall to a more-than-10-year low versus the dollar, a move that closely follows President Trump's decision to implement additional duties on Chinese goods.

The President took to Twitter this morning to accuse China of "currency manipulation," adding, "Are you listening Federal Reserve?" Meanwhile, People's Bank of China (PBoC) Governor Yi Gang described the yuan's lowest level versus the U.S. dollar since 2008 as "driven and determined by the market... due to recent external uncertainties." Barring a dramatic pivot higher, the Dow is eyeing its fifth straight drop, while the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are looking at their sixth straight losses. 

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

  • 3 grocery stocks hit with bear notes.
  • Analysts are backing Etsy stock after earnings.
  • This weed stock just announced a U.S. hemp merger.
  • Plus, Tyson stock bounces higher on earnings beat; Dollar Tree downgraded; and Alibaba stock feels the U.S.-China pressure.

Stock Futures Chart Aug 5

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw 1.02 million call contracts traded on Friday, compared to 888,014 put contracts. The single-session equity put/call ratio climbed to 0.87, while the 21-day moving average rose to 0.62.
  2. Tyson Foods, Inc. (NYSE:TSN) stock is up 2.2% in electronic trading, after the food processing name reported fiscal third-quarter earnings that topped analysts' estimates. That news is helping to offset a revenue miss and the disclosure of a Department of Justice subpoena  related to price fixing in the poultry industry. TSN is now set to trade within a chip-shot of its June 13 record high of $84.30.
  3. Dollar Tree, Inc. (NASDAQ:DLTR) stock is down 2% ahead of the bell, after Deutsche Bank downgraded the discount retailer to "hold" from "buy." The analyst in coverage warned of the impact of tariffs on the retail industry. As of Friday's close, DLTR had shed nearly 15% from its June 24 annual high of $113.37.
  4. Despite a new "buy" rating from Jefferies, the shares of Alibaba Group Holding Ltd (NYSE:BABA) are feeling the crunch from rising U.S.-China tensions this morning. The Chinese-based e-commerce stock is down 4% in electronic trading, and is set to trade at its lowest point in nearly two months.
  5. The Institute for Supply Management's (ISM) non-manufacturing index is due later today. Avis Budget (CAR), Continental Resources (CLR), Marriott International (MAR), Shake Shack (SHAK), Take-Two Interactive Software (TTWO), and Tenet Healthcare (THC) will report earnings.

stock market news aug 5

Overseas Markets Trounced by Trade War

The selling continued in Asia to start the new week on trade war fears and increased tensions in Hong Kong. Starting there, the Hang Seng settled with a 2.4% loss as pro-democracy protests grew in the area, causing the cancellation of more than 100 flights and hindering subway services. In response, Hong Kong Chief Executive Carrie Lam said the city was “on the verge of a very dangerous situation.” China’s Shanghai Composite slid 1.4%, falling to its lowest close since February while the yuan crashed to decade-plus lows. South Korea’s Kospi closed down 1%, and the Nikkei gave back 1.7% in Japan. 

The story is the same in Europe, where stocks are also getting hammered. The French CAC 40 is getting hit the hardest so far, down 2.7%, while Germany’s DAX isn’t far behind, down 2.6% halfway through the day. London’s FTSE 100 was last seen 1.8% lower, as traders flock to safe-haven assets



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