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Top 5 Things to Know in the Market on Tuesday

EconomySep 18, 2018 05:59AM ET
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© Reuters. 5 key factors for the markets on Tuesday

Investing.com - Here are the top five things you need to know in financial markets on Tuesday, September 18:

1. Trump ups the ante on China, Beijing will retaliate

U.S. President Donald Trump said in a statement after Monday’s market close that the U.S. is slapping 10% tariffs on $200 billion worth of Chinese goods starting on September 24 and warned that the tariffs would rise to 25% in January 2019.

Trump added that "if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."

"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," he said in the statement.

"But, so far, China has been unwilling to change its practices."

China was quick to respond, saying on Tuesday that it has no choice but to retaliate against new U.S. trade tariffs, risking even stronger action from Trump in an escalation of the trade war between the world's largest economies.

"To protect its legitimate rights and interests and order in international free trade, China is left with no choice but to retaliate simultaneously," the Chinese commerce ministry said in a brief statement, without specifying what action it would take.

2. Apple, Fitbit spared in U.S.-Sino trade dispute

Even as Trump put into motion the next round of tariffs on Chinese goods, the administration spared a category of high-tech products from the duties.

A product code that covers Apple Inc's (NASDAQ:AAPL) Watch and AirPods - as well as similar smart watches, fitness trackers and other goods made by competitors including Fitbit Inc (NYSE:FIT) - was not on the American government’s list.

Apple sold 4.7 million smart watches last year, and Fitbit sold 2.7 million, according to research company International Data Corp.

Reuters pointed out that some consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor (NYSE:VSTO) and baby car seats and playpens from Graco Inc (NYSE:GGG) also were taken off the list.

Rare earth minerals - used in a wide range of consumer electronics goods - were also dropped from the provisional list, protecting U.S. manufacturers from increasing costs.

3. Oil soars as Saudi Arabia comfortable with $80 Brent

Oil prices soared on Tuesday after Saudi Arabia was reported to be comfortable with Brent above $80 per barrel, as the global market adjusts to the loss of Iranian supply from U.S. sanctions.

Saudi officials were careful to avoid pinpointing a price target in their conversations, saying that while the kingdom has no desire to push prices higher than $80 a barrel, it may no longer be possible to avoid it.

U.S. crude oil futures gained 1.44% to $69.67 by 5:57 AM ET (9:57 GMT), while Brent oil traded up 1.54% to $79.25.

Investors were also focused for weekly data on crude stockpiles to be released from the American Petroleum Institute later in the session. Official government data will be released on Wednesday, amid expectations for a draw of 2.4 million barrels.

4. Global stocks shrug off 10% tariffs

Global stocks took Trump’s announcement of 10% tariffs on China in stride on Tuesday, with most major indices registering gains.

Some observers suggested that investors had prepared for a higher level of 25% that now will be put off until January, providing some months for officials to advance on negotiations.

After an initial dip, Asian stocks closed the session with solid gains, while European shares followed their Asian peers upwards nearing midday trade on Tuesday.

U.S. futures pointed to a higher open, although the rise remained tepid in an environment marked by caution. At 5:58 AM ET (9:58 GMT), the blue-chip Dow futures rose 55 points, or 0.21%, S&P 500 futures gained 6 points, or 0.19%, while the Nasdaq 100 futures traded up 22 points, or 0.29%.

5. North and South Korean leaders set to meet

South Korean President Moon Jae-in will head to Pyongyang on Tuesday in an attempt to salvage stalled nuclear talks between the U.S. and North Korea.

As part of the three-day trip, Moon and Kim Jong Un will hold a joint press conference on Wednesday.

Kim has been avoiding a concrete timetable for ending his nuclear program, pushing for a peace declaration with the U.S. before he gets rid of North Korea’s nuclear capability.

Top 5 Things to Know in the Market on Tuesday
 

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Joe Fusco
Joe Fusco Sep 18, 2018 8:18AM ET
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American companies should start taking business to Vietnam, Philippians, Thailand  and other South East Asian countries.  Once the Chinese see the start of the exodus maybe they will come to the table.  This trade war will hurt China more than the U S.  China is still recognized as a developing country what a joke.  Developing my ****** You can really stir the pot by talking about recognizing Taiwan as a  separate country.
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FM VILLEGAS
FM VILLEGAS Sep 18, 2018 7:41AM ET
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I moved out of equities as a precaution. The Chinese will be more concerned with saving face.
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Lucas Atilano
Lucas Atilano Sep 18, 2018 7:13AM ET
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It’s a trap... the markets moved up to get the dumb money in, but its going down
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Dan Pham
Dan Pham Sep 18, 2018 6:02AM ET
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Good new
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