US open: Sombre start to trading as trade tensions resurface
Wall Street trading kicked off with across-the-board losses on Thursday as simmering tensions between the US and China remained firmly on investors' minds.
At 1530 BST, the Dow Jones Industrial Average was down 0.70% to 24,486.34, while the S&P 500 had dipped 0.66% to 2,749.11 as the Nasdaq moved 0.84% lower to 7,715.51.
Oanda analyst Craig Erlam said: "The week started with the US and China announcing tariffs against one another which will come into effect on 6 July, and it will end with the European Union announcing counter-tariffs against the world’s largest economy in response to those already imposed. While much of what has been announced this week was already anticipated, the rhetoric between these huge trading partners is heating up and that’s a major concern for investors.
"Oil prices are coming under a little pressure once again as we near the outcome of the meeting in Vienna between OPEC and some non-OPEC countries where producers are due to discuss whether and how to increase output following their success in significantly reducing global inventories. It is believed there is some dispute between members on how much to increase output by, with Iran reportedly opposed to bowing to pressure from the US," added Erlam.
West Texas Intermediate was down 0.43% to $65.43 a barrel while Brent crude was 1.70% lower at $73.47.
In corporate news, AT&T nudged 0.62% higher after announcing an alliance with Brookfield Infrastructure to offer colocation and other services to customers in 18 internet data centres in the US 13 overseas. As part of the deal, AT&T will get $1.1bn which will be used to cut debt.
Elsewhere, Micron Technology was 1.46% firmer in early trade after posting well-received earnings late on Wednesday, but American Outdoor Brands lost 4.61% after its quarterly report late on Wednesday.
Olive Garden parent Darden Restaurants shot up 11.10% after its fourth-quarter numbers, while retail giant Kroger picked up 10.16% and bookseller Barnes & Noble lost 6.98% after they reported shortly before the opening bell.
On the data front, the number of Americans filing for unemployment benefits fell to a six-week low last week, according to data from the Labor Department on Thursday.
Initial jobless claims declined by 3,000 to 218,000 from the previous week’s level, which was revised up by 3,000 to 221,000. Economists had been expecting a level of 220,000 claims.
The four-week moving average came in at 221,000, down 4,000 from the previous week’s level, which was revised up by 750.
Elsewhere, manufacturing conditions in the Philadelphia region deteriorated more than expected in June, according to a survey released on Thursday.
The index for current manufacturing activity in the region fell to 19.9 from a revised reading of 34.4 in May, missing economists’ expectations of 29.0. Still, it remained above the zero reading that separates contraction from expansion.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The May jump to a 12-month high, with new orders soaring to a 45-year high, always looked unsustainable. The June drops in both the headline and orders indexes - the latter plunged to 17.9 from 40.6 - probably is just a correction rather than a response to the latest round of tariff threats. The Philly Fed district includes only two relatively small ports, Wilmington and Philadelphia, so it is much less sensitive to the trade spats than other regional Fed surveys, notably the Richmond Fed.
"We now expect the headline index to hover around the 20 mark; solid, but it's hard to see sustainable upside from here. The survey is consistent with little change in the national ISM manufacturing index."
Minneapolis Fed President Neel Kashkari is due to appear at the African Development Center June 2018 Commerce and Community Conversation in Minneapolis.