Wall Street set to open lower as US-China tensions grow

Wall Street set to open lower as US-China tensions grow

The latest geopolitical uncertainty comes at a time when financial markets are already dealing with the fallout from a war in Ukraine. — Reuters pic

Tuesday, 02 Aug 2022 9:35 PM MYT

NEW YORK, Aug 2 — US stock indexes were set to open lower today on concerns that a planned visit by US House of Representatives Speaker Nancy Pelosi to Taiwan could worsen tensions between the United States and China.

The latest geopolitical uncertainty comes at a time when financial markets are already dealing with the fallout from a war in Ukraine, energy crisis in Europe, soaring inflation and tightening of financial conditions.

Shares of chipmakers, which have a large exposure to China, fell in premarket trading. Advanced Micro Devices, Qualcomm, Intel Corp, Micron Technology Inc and Nvidia Corp were down between 0.9 per cent and 1.3 per cent.

The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 24.23 points, its highest level in nearly a week.

“Chip stocks are really exposed to Asia. Some of them have 70 per cent of their sales, especially chip equipment companies, in that region so it’s a big deal for them,” said Jack DeGan, chief investment officer at Harbor Advisory.

Wall Street has kicked off August on a lackluster note following its best monthly performance since 2020 in July amid heightened fears of a global recession, after data showed factory activity weakened across the United States, Europe and Asia.

Against that backdrop, investors have turned increasingly jittery about the health of corporate America.

“Any kind of geopolitical concern can cause traders who gained quite a bit last week to take a little bit (profit) off the table,” Degan said.

At 8:17 a.m. ET, Dow e-minis were down 178 points, or 0.54 per cent, S&P 500 e-minis were down 26.75 points, or 0.65 per cent, and Nasdaq 100 e-minis were down 112.75 points, or 0.87 per cent.

Caterpillar Inc slipped 3.4 per cent after its quarterly sales missed market expectations due to supply-chain issues and the suspension of its Russia operations.

DuPont de Nemours fell 2 per cent after the industrial materials maker lowered its full-year outlook, while shares of credit-rating company S&P Global Inc dipped 2.5 per cent on downbeat 2022 profit forecast.

Among others, Uber Technologies Inc jumped 14 per cent after the ride-hailing firm reported positive quarterly cash flow for the first time ever and forecast upbeat third-quarter operating profit.

Pinterest Inc surged 17.8 per cent as the activist investor Elliott Investment Management become the largest shareholder of the digital pin-board firm.

Arista Networks Inc rose 5.4 per cent after the cloud networking solutions company posted stronger second-quarter results.

On the data front, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report for June is due at 10 a.m. ET. Economists polled by Reuters are forecasting 11 million vacancies. — Reuters