April 2, 2018, by Natasha Doff
The prospect of a trade war intensified after China urged trade talks with the U.S. while saying that previously announced retaliatory measures on American imports took effect on Monday. The U.S. didn’t respond to China’s March 26 request for consultation on Washington’s steel and aluminum duties, according to China’s Commerce Ministry. Beyond the actions on metals, the Trump administration is preparing a proposal of other Chinese products to be targeted with tariffs and has until April 6 to release the list. In other trade-war news, President Donald Trump threatened to pull out of the North American Free Trade Agreement if Mexico doesn’t stop people and drugs from flowing into the U.S. from Central America.
Markets on the back foot
Investors are entering the second quarter on the defensive after the worst three months for global stocks in more than two years. Overnight, the MSCI Asia Pacific Index was unchanged, while Japan’s Topix index closed 0.4 percent lower. Most European markets remained closed for the Easter holiday. As of 5:50 a.m. Eastern Time, S&P 500 futures pointed to a drop at the open, while the 10-year Treasury yield was at 2.764 percent and gold was higher. With the start of the new month, investors will have a chance to focus on a bunch of incoming economic data — including U.S. payrolls on Friday, which are expected to show unemployment fall to its lowest level since 2000.
Amazon in the crosshairs
Amazon.com Inc. looks set to come under more pressure when U.S. stocks resume trading on Monday after Trump launched another attack on the tech giant over the weekend. In a pair of Twitter messages on Saturday, Trump said Amazon “must pay real costs (and taxes) now!” The president also claimed, citing reports he didn’t specify, that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon.” Futures contracts for the Nasdaq 100 fell. Elsewhere in retail, Alibaba Group Holding Ltd. stepped up its efforts to expand in China’s fast-growing market for local delivery food with the purchase of startup Ele.me.
Elon Musk sought to lighten the mood after one of the worst weeks for Tesla Inc. in its 15-year history with a series of April Fool’s Day tweets about bankruptcy. Despite his army of fans, Musk risks coming off as tone deaf to mounting investor concerns after a Moody’s Investor Service downgrade last week. In a more serious bid to disprove doubters, the company is racing to deliver its mission-critical Model 3 sedan.
Oil field discovery
Bahrain said it discovered its biggest oil field since the island kingdom started producing crude in 1932. The smallest energy producer in the Persian Gulf said it found the offshore Khaleej Al Bahrain Basin during the expansion of another field. The discovery comes just days after Bahrain was said to have reined in plans for more bond sales after the sale of $1bn in Islamic debt caused a spike in spreads on its existing debt. Crude oil capped a third straight quarterly gain last week and extended the rally into April, with a barrel of WTI for March delivery trading at $65.16.