Investing.com - Here are the top five things you need to know in financial markets on Thursday, July 19:
1. Trade War Fears Return To The Forefront
Trade war jitters returned to the forefront after China said comments made by a senior White House official blaming Chinese President Xi Jinping for blocking progress on a deal to avert a trade war were "shocking" and "bogus" accusations.
On Wednesday, Larry Kudlow, who heads the White House Economic Council, said that he believed lower-ranking Chinese officials want a deal, including Xi's senior economic adviser Liu He, but that Xi has refused to make changes to China's technology transfer and other trade policies.
Asked about Kudlow's comments, China's foreign ministry spokeswoman Hua Chunying said earlier: "That the relevant United States official unexpectedly distorted the facts and made bogus accusations is shocking and beyond imagination."
The U.S. and China this month slapped tariffs on $34 billion of each other's imports in an escalating trade tussle that has roiled financial markets.
U.S. President Donald Trump has threatened further tariffs unless Beijing agrees to change its intellectual property practices and high-technology industrial subsidy plans.
At the same time, the European Union is preparing a list of counter-measures to potential U.S. tariffs on European cars, European Trade Commissioner Cecilia Malmstrom said today, adding she hoped an EU visit to Washington could help ease tensions.
2. U.S. Stock Futures Point To Lower Open
U.S. stock futures pointed to a lower open, as investors continued to keep a wary eye on recent trade disputes between the U.S. and several of its trading partners.
At 5:30AM ET, the blue-chip Dow futures were down 38 points, or about 0.1%. The S&P 500 and the tech-heavy Nasdaq 100 futures also indicated a downbeat start to their respective trading sessions.
Elsewhere, in Europe, most of the region's major bourses traded lower, with the different sectors mostly in negative territory. Basic resources fell 1.5%, among the worst-performers in mid-morning trade.
Earlier, Asian stocks closed mixed, with major markets fading after initially trading higher. China's Shanghai composite shed 0.5%, marking a fifth straight session of declines, while the yuan sank to fresh one-year lows (USD/CNH).
The move lower has prompted speculation that Chinese policymakers are allowing their currency to weaken in order to offset the impact of U.S. trade tariffs, by making their exports more competitive.
3. Microsoft Is Next Up In String Of Tech Results
Following earnings from Netflix (NASDAQ:NFLX) at the start of the week, Microsoft (NASDAQ:MSFT) is the next big name from the technology sector to report quarterly results after the markets close on Thursday.
Analysts are forecasting earnings per share EPS of $1.08 on revenue of $29.21 billion. In the prior-year quarter, the company earned $0.98 on revenue of $24.7 billion.
Microsoft has beat earnings estimates in each of the past 8 quarters.
The stock is up about 22% year to date, slightly below its recent all-time high of $106.50 on July 17.
Results in the morning are also expected from Dow member Travelers (NYSE:TRV). Philip Morris (NYSE:PM), Blackstone (NYSE:BX), Domino’s Pizza (NYSE:DPZ), Bank of New York Mellon (NYSE:BK), Fifth Third Bancorp (NASDAQ:FITB), Danaher (NYSE:DHR), Union Pacific (NYSE:UNP) and Nucor (NYSE:NUE) are also on the docket.
After the closing bell, earnings from Capital One (NYSE:COF), E-Trade (NASDAQ:ETFC), Skechers (NYSE:SKX) and Intuitive Surgical (NASDAQ:ISRG) will all be in the spotlight.
Investors will also be focused on IBM (NYSE:IBM) shares after the company beat second-quarter earnings expectations laid out by analysts after Wednesday's closing bell.
4. Dollar Rallies To 1-Year High On Fed Rate Hike Bets
Away from equities, the U.S. dollar extended its rally to trade at a one-year high after hawkish comments by the chairman of the Federal Reserve underlined expectations for two additional rate hikes by the central bank this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.4% to 95.26, the strongest level since July 14, 2017.
Demand for the dollar continued to be underpinned after Fed Chairman Jerome Powell gave an upbeat assessment of the U.S. economy during congressional testimony on Tuesday and Wednesday, and downplayed the impact of uncertainty over U.S. trade policy on the outlook for additional rate hikes.
Elsewhere, in the bond market, U.S. Treasury prices edged lower, pushing yields higher across the curve, with the benchmark 10-year yield rising to around 2.89%, while the Fed-sensitive 2-year note was near 2.63%.
On the data front, the economic calendar brings investors the weekly report on initial jobless claims and the Philadelphia Fed’s July reading on manufacturing activity both due at 8:30AM ET.
5. Copper, Gold Prices Crash As Metals Sell Off
Copper and gold prices fell to their lowest levels in a about a year, amid fears that an escalating trade spat between Washington and Beijing could hit demand for metals, particularly if Chinese growth is affected.
Copper futures were down almost 3% to $2.679 a pound, a level not seen since July 14, 2017.
Nickel, zinc and lead also suffered steep selloffs.
Meanwhile, among precious metals, gold tumbled roughly 1% to $1,217.30 an ounce, reaching the weakest in about a year on its fifth consecutive decline.
Silver, platinum and palladium futures were also all down at least 1%.
Metals prices have also been hit by the stronger dollar, which makes commodities priced in the U.S. currency more expensive for overseas buyers.