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US stock futures shrug off trade threats; dollar steady ahead of Q1 GDP


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Global M&A By the Numbers: Q1 2022

US stock futures shrug off trade threats; dollar steady ahead of Q1 GDP

➤ China said to halt purchases of U.S. soybeans.

➤ U.S. seeks to boost production of rare earth minerals.

➤ Yields, dollar steady ahead of updated U.S. first-quarter GDP reading.

➤ Shekel dips as PM Netanyahu fails to form government.

U.S. stock futures tracked gains in Europe despite declines in Asian equities as the trade spat between the U.S. and China continued to heat up, while the dollar and Treasurys steadied before the release of updated U.S. GDP figures for the first quarter.

China reportedly put on hold purchases of American soybeans amid escalating trade tensions between Beijing and Washington. The news comes as the U.S. Defense Department was said to be seeking funding to boost domestic production of rare earth minerals and reduce reliance on China amid growing speculation that Beijing could restrict rare earth exports to the U.S.

Echoing an earlier statement from the Chinese state planning agency, Commerce Ministry Spokesman Gao Feng said it would be unacceptable that countries that use the said minerals would repress China. Risk assets are looking "increasingly fragile" as China hints at using rare earths as a trade-war weapon against the U.S., Citi analysts wrote in a note.

The escalation of tensions in recent days also "lends support to the markets' increasing concerns about an extension to the U.S.-China trade war beyond the Xi-Trump meeting in late June," the note said.

Stocks in Asia were broadly in the red as the Shanghai SE Composite and Japan's Nikkei 225 retreated 0.3%, while Hong Kong's Hang Seng fell 0.4%. European bourses picked up, with the FTSE 100 and France's CAC 40 up 0.5% and Germany's DAX rising 0.6%.

Futures pointed to a rebound on Wall Street at the open today after the S&P 500 and the Nasdaq Composite yesterday closed down 0.7% and 0.8%, respectively. Yields on 10-year Treasury notes steadied at 2.26% after falling to as low as 2.21% yesterday, while the dollar index was broadly flat at 98.1 ahead of the second estimate of the U.S.'s first-quarter GDP growth, with markets expecting a downward revision to 3.0% from 3.2%.

"Today's GDP report needs to come in at least around the 3% level, otherwise the dollar will be in trouble," wrote Konstantinos Anthis, head of research at private financial services firm ADSS.

The British pound was little changed against the dollar, while the euro rose nearly 0.1%. The Canadian dollar gained 0.2% versus the U.S. currency after the Bank of Canada yesterday struck a more optimistic tone on the country's economic rebound as it kept rates on hold, in line with expectations.

Elsewhere, the Israeli shekel lost 0.2% against the U.S. dollar as Prime Minister Benjamin Netanyahu failed to form a coalition government, paving the way for a new general election Sept. 17.

Brent crude oil dropped 0.9% to $68.85 per barrel on the ICE Futures Exchange. Gold was down 0.4% to $1,280.60 an ounce.

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The day ahead:

8:30 a.m. ET — U.S. GDP (Econoday consensus: 3.0% quarter over quarter)

8:30 a.m. ET — U.S. international goods trade balance (Econoday consensus: $-71.9 billion)

8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 215,000)

8:30 a.m. ET —U.S. corporate profits

8:30 a.m. ET — U.S. advance retail inventories (Econoday consensus: -0.3% month over month)

8:30 a.m. ET — U.S. advance wholesale inventories (Econoday consensus: 0.3% month over month)

10 a.m. ET — U.S. pending home sales index (Econoday consensus: 0.5% month over month)

11 a.m. ET — Energy Information Administration petroleum status report

12 p.m. ET — U.S. Fed's Richard Clarida speaks

4:30 p.m. ET — U.S. Fed balance sheet

4:30 p.m. ET — U.S. money supply

7:30 p.m. ET — Japan unemployment rate (Econoday consensus: 2.4%)

7:50 p.m. ET — Japan industrial production (Econoday consensus: 0.2% month over month)

7:50 p.m. ET — Japan retail sales (Econoday consensus: 1.0% year over year)

9 p.m. ET — China Federation of Logistics and Purchasing manufacturing PMI