U.S. Stocks May See Initial Weakness On Rising Trade Tensions

(RTTNews) - After ending last Friday's volatile session little changed, stocks are likely to move to the downside in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.3 percent.

Renewed trade concerns are likely to weigh on the markets amid further signs of rising tensions between the U.S. and China.

China on Monday pushed back against President Donald Trump's claims that it had broken the Geneva trade agreement, accusing the U.S. of violating the deal with increased tech export restrictions and the revocation of Chinese student visas.

"These practices seriously violate the consensus reached by the two heads of state on January 17, seriously undermine the existing consensus of the Geneva economic and trade talks, and seriously damage China's legitimate rights and interests," a Chinese Ministry of Commerce spokesperson said.

A collapse of the U.S.-China trade agreement could lead to considerable weakness among stocks, which have shown a considerable recovery since Trump's "reciprocal tariff" announcement in early April.

The Trump administration has also announced it will double the current tariff rate on steel and aluminum imports from 25 percent to 50 percent.

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of May. The ISM's manufacturing PMI is expected to rise to 49.5 in May from 48.7 in April, but a reading below 50 would still indicate contraction.

Stocks shook off a sluggish start on Friday, with the major averages posting a mild recovery to finish mixed and little changed.

The Dow inched up 54.34 points or 0.1 percent to finish at 42,270.07, while the Nasdaq slipped 62.11 points or 0.3 percent to close at 19,113.77 and the S&P 500 eased 0.48 points or less than a tenth of a percent to end at 5,911.69.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index slumped by 1.3 percent, while Hong Kong's Hang Seng Index slid by 0.6 percent.

Most European stocks have also moved to the downside on the day. The French CAC 40 Index is down by 0.6 percent and the German DAX Index is down by 0.4 percent, although the U.K.'s FTSE 100 Index has bucked the downtrend and inched up by 0.1 percent.

In commodities trading, crude oil futures are soaring $2.90 to $63.69 a barrel after slipping $0.15 to $60.79 a barrel last Friday. Meanwhile, after slumping $28.20 to $3,288.90 an ounce in the previous session, gold futures are surging $72.80 to $3,361.70 an ounce.

On the currency front, the U.S. dollar is trading at 142.72 yen versus the 144.02 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1428 compared to last Friday's $1.1347.