Key demands

President Donald Trump’s continued complaints about China’s lack of agricultural concessions and Beijing’s insistence on the easing of trade restrictions on technology giant Huawei Technologies Co. mean that progress towards substantial talks remains very slow. People close to the negotiations now see the chances of a substantive trade agreement being reached as increasingly remote. There was another sign of the damage the uncertainty is doing to global trade overnight when Japanese exports dropped more than expected in June.

Nice strait you have there…

Iran’s Foreign Minister Mohammad Javad Zarif said that his country could close the Straits of Hormuz if it wanted to – but that it doesn’t want to as it is a lifeline for the country’s economy. He also said than the U.S. had “shot itself in the foot” by withdrawing from the 2015 nuclear deal, dimming hopes of talks with the White House any time soon. Investors remain wary of the risks posed by the standoff, with oil’s selloff easing as Iran seemed to take a harder line on negotiations.

Earnings

It’s Morgan Stanley’s turn to try to add some excitement to Wall Street bank earnings season this morning. Investors will keep a close eye on the bank’s stocks trading business for signs of gains in market share as Deutsche Bank AG exits that space. The real action this week has been in tech, with Netflix Inc. plunging in the wake of disappointing results, while eBay Inc. rallied on better than expected profits. Microsoft Corp. reports after the bell today.

Markets drop

Overnight the MSCI Asia Pacific Index dropped 0.8% while Japan’s Topix index closed 2.1% lower as investors became increasingly concerned about a weak earnings season. In Europe, the Stoxx 600 Index was trading down 0.4% by 5:50 a.m. Eastern Time as, again, earnings weighed. S&P 500 futures were also pointing south, the 10-year Treasury yield was at 2.054% and gold was holding on to most of yesterday’s rally.

Coming up…

It’s Thursday so we get weekly jobless claims at 8:30 a.m., with a slight increase expected from last week’s surprise low figure. The Philadelphia Fed Index for July is published at the same time. Speaking of Feds, today’s speakers are Federal Reserve Bank of Atlanta President Raphael Bostic and New York Fed President John Williams. The  Group of Seven finance ministers meeting continues in Paris.