Wall Street futures drifted lower Tuesday, while global markets sputtered, as investors cheered progress in trade talks between Washington and Beijing but kept optimism in check amid a fresh tariff dispute between Europe and the United States.
President Donald Trump told reporters in Washington late Monday that trade negotiations had "essentially" begun between the world's two biggest economies, after he reached a deal to re-start talks with China President Xi Jinping at the G-20 summit in Osaka, but noted that any final agreement would need to be "somewhat titled" to the US's advantage.
Those remarks added perspective to a move by the U.S. Trade Representative's office to increase the value of European-made goods targeted for potential import tariffs by $4 billion -- to $25 billion -- amid a long-running dispute between Washington and Brussels over government subsides to aircraft makers Airbus SE (EADSY) and Boeing Co. (BA - Get Report)
The threat of a fresh round of tit-for-tat tariff increases, as well as manufacturing PMI data Monday that indicated the lowest level of global factory output since 2012, kept U.S. equity futures in check overnight and held gains in Asia to modest levels as investors kept a cautious stance heading into the thin liquidity of the July 4 holiday.
Futures contracts tied to the Dow Jones Industrial Average suggest a 58 point opening bell side for the 30-stock average while those linked to the broader S&P 500, which hit an all-time intraday high of 2,977.93 points before paring gains into the close, are indicating a 5.6 point pulback.
European stocks edged higher at the start of trading in Frankfurt, with the Stoxx 600 rising 0.1% as benchmarks around the region nudged higher despite the fresh trade and tariff concerns, with Germany's DAX slipping 0.15% into the red as auto stocks sputtered.
Asia stocks were modestly higher across the board, with Japan's Nikkei 225 rising for a second consecutive session and adding 0.11% to its second-half gains while the region-wide MSCI Asia ex-Japan index was marked 0.25% higher, lead by a 1.3% advance for Hong Kong's Hang Seng index even as the city state remains paralyzed by violent protests linked to the government's support of an extradition bill backed by Beijing.
Global oil prices were on the move again Tuesday, as well, rising modestly in early European trading following an agreement between OPEC members late Monday in Vienna that will extend the cartel's production cuts, which along with non-member allies such as Russia are taking 1.2 million barrels from the market each day, for a further 9 months and into the first quarter of 2020.
"The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between President Trump and President Xi and the truce they have reached in their trade and the resumption of serious trade negotiations," Saudi Arabia's influential Energy Minister, Khalid al-Falih told reporters in the Austrian capital.
Brent crude contracts for August delivery, the global benchmark, were seen 11 cents lower from their Monday close in New York and changing hands at $64.95 per barrel in early European trading. WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 14 cents lower at $58.95 per barrel.