US open: Stocks on the back foot ahead of Trump-Xi summit
US stocks were on the back foot on Monday as investors geared up for the first bilateral meeting between President Trump and Chinese counterpart Xi Jinping.
At 1548 BST, Dow Jones Industrial was flat at 20,642.79, the S&P 500 fell 0.23% to 2,353.53, and the Nasdaq was down 0.15% to 5,885.92.
Investors were holding out making big investments as they looked ahead to Thursday’s summit at Trump’s Mar-a-Lago resort in Florida where the two leaders are expected to talk about trade and reigning in North Korea’s nuclear ambitions.
Trump has already tweeted that he expects the meeting to be “very difficult” as the US can no longer have “massive trade deficits”.
During the presidential campaign he railed against the US’s $500bn yearly trade deficit, which China contributes more than $300bn to, and called China a currency manipulator.
Trade balance figures released on Tuesday revealed that that US trade fell sharply in February as imports from China fell and exports rose for a third straight month.
The deficit shrank to $43.6bn last month from $48.2bn in January, while exports rose 0.2% to $192.9bn and imports fell 1.8% to $236.4bn.
Chinese imports to the US were down $8.6bn with the trade deficit with China declining 26.6% to $23bn.
In a recent interview with the Financial Times, he also said that he would use trade as leverage to get China to deal with North Korea’s nuclear weapon capabilities.
FXTM research analyst Lukman Otunuga said: “Wall Street may be in store for further punishment moving forward as risk-off is the name of the game ahead of the meeting between Donald Trump and Chinese president Xi Jinping. While the fanatical optimism over Trump’s proposed fiscal policies boosting US growth has fueled the phenomenal stock market rally, the rising protectionist fears and concealed concerns over the pro-growth agenda falling short of expectations could start an unexpected sell-off”.
In currency markets, the dollar was up 0.2% against the pound to 0.8025 and rose 0.11% against the euro to 0.9382, but was down 0.32% versus the yen to 110.55.
Meanwhile, West Texas Intermediate was up 0.79% to $50.464 per barrel and Brent crude gained 1.04% to $53.68.
In other data, US factory orders rose 1% as expected in February after a 1.5% rise in January, which was revised up from 1.2%.
On the corporate front, NewLink Genetics plunged 20.05% after investors questioned how effective the company’s melanoma drug is compared to rival Merck’s’ similar drug Keytruda, after results for a phase two study.
Conn's Inc soared 25.44%, a six week high, after the Texas retailer reported an unexpected fourth quarter profit.
Staples climbed 14.2% after the Wall Street Journal reported that the stationary giant was exploring a possible sale.
Acuity Brands tumbled 14.89% after the electronics manufacturer missed second quarter earnings and revenue forecasts.
Coupa Software fell 2% after a 180-day lock-up expired on Tuesday allowing shareholders to sell for the first time since its IPO last October.
Looking ahead to the rest of the week, Wednesday sees the release of the latest minutes from the Federal Open Market Committee, while Friday's highlight will be the non-farm payrolls report.