US midday: Trading subdued as trade wars loom
Trading on Wall Street got off to a subdued start on Monday, as US President Donald Trump took a swing at Amazon and concerns over escalating trade wars dominated.
As at 1745 BST, the Dow Jones Industrial Average was up 12.93 points at 25,071.05, the S&P 500 was ahead just 5.77 points at 2,897.55 and the Nasdaq was up 16.37 points to 7,836.69.
Trump tweeted that “Amazon Washington Post” had gone “crazy against me” and was using the US Post Office "at a fraction of real cost, as their delivery boy for a big percentage of their packages." Amazon founder and chief executive Jeff Bezos owns The Washington Post.
Trump has long called for greater taxes on Amazon, saying at the start of this year that the online retailer’s dominance was hurting other American retailers. His latest outburst renewed concerns on Wall Street that Amazon could face anti-trust claims, and the shares fell nearly 2% in early trading although they pared back some losses as the session continued.
Tech stocks were in focus across Wall Street, with Google-parent Alphabet set to report second-quarter numbers after the bell on Monday and Facebook and Amazon following suit later in the week.
International trade wars were also a source of interest for Wall Street. The US and China have both imposed tariffs, and Trump has made it clear he is prepared to extend that to all Chinese goods imported into the US, sending the dollar sky high.
Meanwhile, Trump is due to meet the EU to discuss trade. He believes that the EU’s 10% tariff on cars are too high compared to America’s 2.5%, but the EU will only be able to reduce its rate if it does so for all World Trade Organization members or agrees a wide-reaching bilateral accord with the US.
Noted David Madden at CMC Markets: “Traders are nervous the strained trading relations could lead to a full-on trade war. The move to the downside hasn’t been too big and dealers will be look forward to Wednesday’s meeting between Trump and the president of the EU commission, Jean-Claude Juncker.”
In economic news, data published Monday showed that sales of existing homes had fallen by 0.6% in June to a seasonally-adjusted annual rate of 5.38 from a downwardly-revised 5.41m in May. Economists have been expecting sales to puck up to 5.44m in June.
On the year, sales are now 2.2% lower and have fallen for the fourth-straight month on an annual basis.
Berenberg Capital Markets said: “We expect that housing demand will continue to outpace supply due to the strong economy, improving labor markets and favourable demographics, and that residential construction will need to accelerate appreciably faster to meet this robust demand.”
In other corporate news, Halliburton shares fell heavily, despite second-quarter earnings narrowly beating expectations. Instead, traders decided to focus on a lack of information about possible transportation issues in the key markets and sent the shares down as much as 7%.
Tesla Motors also saw its shares fall, by almost 5%, after reports in the Wall Street Journal that the electric car maker had reportedly asked some suppliers to return payments to the money-losing company.