Global stocks drifted lower Tuesday, with investors taking a cautious stance on risk following comments from President Donald Trump that suggested his weekend summit with China's Xi Jinping may not yield a breakthrough in trade talks between the world's two biggest economies and ahead of two key speeches from Federal Reserve policy makers that could clarify its near-term rate path.
In an interview published late Monday in the Wall Street Journal, Trump said it was "highly unlikely" that he'll hold off on taking the current level of tariffs applied on China-made imports into the United States to 25% on January 1. He also said that, baring a deal on the sidelines of the G20 summit in Buenos Aires this weekend, he's ready to apply a further round of levies on $267 billion worth of imports, including Apple Inc. AAPL iPhones and laptops, starting next year.
"The only deal would be China has to open up their country to competition from the United States," Trump was reported as saying. "As far as other countries are concerned, that's up to them."
Stocks in Asia reacted cautiously to the President's warning, with investors declining to take Wall Street's solid closing momentum into the Tuesday session, where Japan's Nikkei 225 closed 0.64% higher at 21,952.40 points and the region-wide MSCI Asia ex-Japan benchmark edged 0.32% higher into the final hours of trading.
U.S. equity futures were similarly cautious, with contracts tied to the Dow Jones Industrial Average indicating a 135 point pullback and those linked to the S&P 500 suggesting a 15 point dip for the broader benchmark. Nasdaq Composite futures are marked around 52 points lower from their Monday close.
Apple shares were marked 2.02% lower in pre-market trading Tuesday, indicating an opening bell price of $171.09 each, a move that would extend the stock's decline from the Oct 3 record high to around 26% and value the Cupertino, Calif.-based tech giant at just over $816 billion.
European stocks were also hitting session lows by mid-day, as markets in Frankfurt and London failed to take advantage of weaker currencies. Britain's FTSE 100 was marked 0.33% lower despite the pound slipping to a two-week low of 1.2750 against the dollar amid increasing questions over the fate of Theresa's May recently-agreed Brexit deal in British parliament while the Stoxx 600 was marked 0.5% lower despite a falling euro that was hit by dovish comments from European Central Bank President Mario Draghi during testimony to European lawmakers on Monday.
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.2% higher at 97.27 ahead of a speech later today from Fed Vice Chair Richard Clarida, who moved markets last week when he told CNBC that a slowing global economy was something that policymakers would need to account for when setting U.S. interest rates. Clarida's boss, Fed Chair Jerome Powell, will speak Wednesday at the New York Economic Club.
The dollar's overnight uptick, however, was more likely triggered by weakness in global oil prices than accelerated bets on faster Fed hikes, as crude gave back Monday's gains amid reports of record Saudi production and increasing concerns of oversupply in a market where demand is expected to slow notably into the first half of 2019.
Brent crude contracts for January delivery, the global benchmark, were seen 7 cents lower from their Monday close in New York and changing hands at $60.41 per barrel while WTI contracts for the same month, which are more tightly liked to U.S gas prices, were marked 17 cents lower at $51.46 per barrel.