North American equity markets pared pre-market losses to trade only slightly downward in the wake of a Trump administration move toward imposing tariffs on $11 billion in imports from the European Union; on products ranging from passenger helicopters, motorcycles, cheese, wine and ski-suits.
Despite significantly escalating transatlantic trade tensions, US market participants appeared to shrug off these threats from the President into the early hours of the morning.
The administration told reporters that the move was justified by the bloc’s subsidies for Airbus, the European aircraft manufacturer and Boeing rival, after the US had concluded that estimates of $11 billion worth of damage from EU subsidies to Airbus has caused “adverse effects”.
The EU has since called the $11 billion sum cited by the USTR “greatly exaggerated” and said preparations were underway to prepare retaliatory tariffs against the US over subsidies to Boeing (BA).
These pre-market developments come after Monday’s session where Wall Street overcame a sluggish start to close slightly higher, bucking a global trend where foreign equity markets slipped back from multi-month highs.
The S&P 500 finished +0.08% higher, having been down as much as -0.4% in morning trade. Meanwhile, the Dow Jones Industrial Average and Nasdaq Composite ended mixed, down -0.36% and positive +0.25% respectively; with the Dow’s decline largely hampered by Boeing (BA: -4.44%).
Moving forward, aside from new EU tariffs, market focus will likely remain focused on the prospects for a conclusion in talks between the US and China, as well as key events this week, including American inflation data, a European Central Bank decision and May’s meeting with EU leaders.
In today’s economic calendar, Job Openings for February are expected to be released at 10am EST.
In corporate news, Levi Strauss (LEVI), WD-40 (WDFC), Lindsay (LNN) and PriceSmart (PSMT) are amongst the major companies expected to issue their 2019 Q1 earnings today.
TODAY’S TOP HEADLINES:
Europe & Trade: EU-US Trade War Escalates Over Disputed Aviation Subsidies. (Bloomberg) The European Union is preparing retaliatory tariffs against the US over subsidies to Boeing, significantly escalating transatlantic trade tensions hours after Washington vowed to hit the EU with duties over its support for Airbus.
Europe & China: The EU and China Rescue a Plan to Present United Front to Trump. (Bloomberg) The European Union and China managed to agree on a joint statement for Tuesday’s summit in Brussels, papering over divisions on trade in a bid to present a common front to US President Donald Trump, EU officials said.
Elections: Israeli voters head to the polls in one of the ‘most unsavory’ campaigns in country’s history. (CNBC) Roughly 6.3 million Israelis are expected to cast their ballots today in an election that will have serious implications for the legacy of incumbent Prime Minister, Benjamin Netanyahu, for Palestinians, and for Israel’s relationship with the rest of the Middle East.
ECONOMIC CALENDAR Today’s Economical Announcements
10:00AM – ★★★ – JOLTs Job Openings (Feb) (Previous: 7.581M)
STOCKS IN THE SPOTLIGHT: Pre-Market Movers & News Related Stocks
Zogenix (ZGNX): [NEWS] The Food and Drug Administration refused to review a marketing application for the drugmaker’s seizure treatment. The FDA said the application was insufficient and would have to be resubmitted.
US Steel (X): [DOWNGRADE] Downgraded to underperform” from “neutral” at Credit Suisse, which points to a weakened competitive position for US Steel.
Avaya (AVYA): [NEWS] Avaya is preparing to investigate a possible sale of the company, according to a Bloomberg report. That follows the receipt of unsolicited interest in the business communications company.
Wynn Resorts (WYNN): [NEWS] Wynn is offering $7.1 billion for Australian casino operator Crown Resorts. Crown said talks between the two parties were at a preliminary stage, with the proposed bid consisting of 50% cash and 50% in Wynn shares.
Walt Disney (DIS): [UPGRADE] Cowen upgraded Disney to “outperform” from “market perform,” predicting that Thursday’s investor day will be a “deck-clearing” event for positive sentiment. However, Cowen does note concerns about the recent acquisition of Fox assets as well as prospects for Disney’s direct-to-consumer offerings.
Boeing (BA): [NEWS] Boeing remains on watch after falling nearly 4.5% Monday and dragging nearly 120 points off the Dow Jones Industrial Average by itself. A potential negative story has been rebutted this morning, with China Aircraft Leasing Group denying a newspaper report that it had put an order for 100 737 Max jets on hold.
Fiat Chrysler (FCAU): [NEWS] Fiat Chrysler will pay $110 million to settle a lawsuit that it had misled investors about safety concerns surrounding excess diesel emissions. An investor group had sued the automaker in 2015, saying it had falsely claimed it was complying with safety regulations.
Altria (MO): [NEWS] Altria has been asked by the Federal Trade Commission for more information on its investment in e-cigarette maker Juul. Altria, the maker of Marlboro cigarettes, bought a 35 percent stake in Juul for $12.8 billion in November, and is now seeking to convert its non-voting stake in Juul to voting shares.
PerkinElmer (PKI): [UPGRADE] Upgraded to “buy” from “neutral” at Goldman Sachs, with the life sciences company’s stock also added to Goldman’s “Conviction Buy” list. Goldman thinks PerkinElmer’s growth will accelerate beyond the Street’s consensus estimates.
Alcon (*ALC): [NEWS} Alcon will begin trading on the New York Stock Exchange today under the symbol “ALC,” following the Swiss eye care company’s spin-off from drugmaker Novartis.
GAINERS: AMC, SYMC, MRNA, PII, SGEN, WYNN, JBL DECLINERS: SGMS, MC, BA, SPR
B. Riley Principal Merger (BRPM.U) (Price: 10) (Est. Vol: $125.0M)