US open: Mixed start to trading as trade tensions heighten

Wall Street opened with some mixed trading on Tuesday amid fresh trade tensions between the US and China and a slew of high-profile earnings.

At 1540 GMT, the Dow Jones Industrial was 0.50% higher at 24,650.25 and the S&P 500 carved out a 0.05% gain to 2,645.11. However, the Nasdaq Composite was trading 0.32% weaker at 7,062.95.

The Dow opened 120 points higher as market participants were patiently awaiting the outcome of two days of Sino-US trade talks that were set to kick-off in Washington on Wednesday following news that the US Justice Department had filed a host of criminal charges against Chinese telecoms company Huawei and its chief financial officer, Meng Wanzhou.

The US delegation will be led by Trade Representative Robert Lighthizer and will include Treasury Secretary Steven Mnuchin, Secretary of Commerce Wilbur Ross and Trump's policy advisers Larry Kudlow and Peter Navarro, while the Chinese delegation will be led by Vice Premier Liu He.

Oanda analyst Craig Erlam said: "Trade talks between the US and China appeared to be going rather well until last week when speculation started circling that a preparatory meeting prior to Liu He’s visit this week had been cancelled. While this was denied by Larry Kudlow, it was followed by claims that the two sides are miles and miles from a deal and now another spanner has been thrown in the works, with the US filing numerous charges against Chinese telecom giant Huawei.

"Huawei has long been a target of the US so these charges aren’t necessarily surprising but the timing of them is curious. For now, it threatens to ratchet up tensions between the world’s two largest economies, as they work towards a deal that prevents further tariffs and ideally removes those already imposed. Only time will tell whether the charges damage negotiations or serve as a tool to progress the talks."

Elsewhere, the United States approved sanctions against Venezuela's state-owned oil firm PDVSA as it ramps-up efforts to force President Nicolás Maduro into relinquishing power of the South American nation.

Treasury Secretary Steven Mnuchin said the proceeds of the purchase of Venezuelan oil would now be withheld from Mr Maduro's government, but added that sanctions could be avoided by the country's government recognising opposition leader Juan Guaidó as interim president, as the US and 20 other nations have already done.

The sanctions are likely to have a sizeable impact as 41% of Venezuelan oil exports are sent to the US, making the country one of the top four crude oil suppliers to the States.

Meanwhile, the Greenback was slipping 0.14% against Sterling to 0.7589.

In corporate news, Pfizer was 1.04% higher in early trade after its fourth-quarter earnings and revenue beat expectations but its guidance for 2019 fell short.

Xerox shot up 8.55% at the bell as its fourth-quarter profit beat expectations but revenue declined more than expected.

3M and Biogen picked up 3.08% and 1.12%, respectively, following the release of their quarterly figures, while Verizon lost 3.14% and Harley-Davidson dropped 4.10% on the back of theirs.

However, the day's main events will take place after the close, with tech giant Apple and online retailer eBay slated to report quarterly earnings.

CMC Markets analyst Michael Hewson said: "With concerns about a China slowdown at the forefront of investor thinking and the big drop in Nvidia’s share price yesterday all eyes will turn to Apple’s Q1 numbers later today after the bell, after the falls seen yesterday.

"A sharp drop here would suggest that demand for the more expensive models is slowing sharply and that peak iPhone or Apple fatigue is creeping in as consumers tire of the incessant minor upgrades, and lack of innovation elsewhere."

On the data front, US house prices rose less than expected in November, according to the S&P/Case-Shiller national home price index.

The 20-city composite index was up 4.7% year-over-year, down from a 5% increase the month before and missing expectations for a 4.9% rise. This marked the slowest rate of annual growth since January 2015.

Elsewhere, a major measure of US consumer confidence fell for a third consecutive month in a row in January, going a way to highlight that political discord in Washington and economic uncertainties were weighing on the nation's households.

The Conference Board revealed that its US consumer confidence index had fallen to 120.2 in January from the 126.6 reported back in December.

Economists had pencilled in a reading of 124.

Lastly, the Fed kicked off its two-day policy meeting where it is expected to signal a pause in tightening and acknowledge several growing economic risks.