Investing.com - Here are the top five things you need to know in financial markets on Monday, August 6:
1. U.S.-China Rhetoric Flares Up Again
China's state media lashed out at the policies of U.S. President Donald Trump in an unusually direct attack, adding to worries that the world's two largest economies are spiraling towards a full-blown trade war.
The ruling Communist Party's People's Daily newspaper singled out Trump in an editorial today, saying he was starring in his own "street fighter-style deceitful drama of extortion and intimidation" and his expectation that others play along is simply "wishful thinking."
China's strictly controlled news outlets have frequently rebuked the United States and the Trump administration as the trade conflict has escalated, but they have largely refrained from specifically targeting Trump until now.
The comments came after China on Friday announced retaliatory tariffs on $60 billion worth of U.S. products.
That move was in response to the Trump administration's proposal of a 25% tariff on $200 billion worth of Chinese imports.
2. Global Markets Start The Week Lower
Global stocks started the week on a downbeat note, as a backdrop of renewed trade tensions weighed on sentiment.
Trade-war fears have been simmering for months, keeping market gains in check with investors jittery over the prospects of further escalation in tensions between the world's two largest economies having an impact on economic growth.
Asian shares closed mixed, paring gains seen earlier.
Mainland Chinese stocks led losses in the region once again, with indices steepening losses in the afternoon. The Shanghai Composite declined 1.3%, while smaller-cap stocks in Shenzhen fell 2.1%.
The cautious sentiment carried over to Europe, where most of the region's major bourses slid lower in mid-morning trade, with nearly every sector in negative territory.
Among national indexes, Germany's export-heavy DAX took the brunt of investors' anxieties over trade, dropping by as much as 0.7%.
On Wall Street, U.S. stock futures looked set to kick off the week on the backfoot, with the major indices on track to open with modest losses.
The blue-chip Dow futures were down 30 points, or around 0.1%, at 5:25AM ET, the S&P 500 futures shed 5 points, or around 0.2%, while the tech-heavy Nasdaq 100 futures indicated a loss of 8 points, or roughly 0.1%.
3. Earnings Season Starts To Wind Down
About 40 S&P 500 companies are due to report financial results this week, in what will be the last big wave of the second-quarter earnings season.
Monday sees Tyson Foods (NYSE:TSN), Newell Brands (NYSE:NWL), Cardinal Health (NYSE:CAH), and SeaWorld (NYSE:SEAS) report ahead of the opening bell.
After the bell, Weight Watchers (NYSE:WTW), Etsy (NASDAQ:ETSY), Turtle Beach (NASDAQ:HEAR), Twilio (NYSE:TWLO), Hertz Global (NYSE:HTZ), Marriott (NASDAQ:MAR), and Zillow (NASDAQ:ZG) are due.
Some other high-profile names reporting this week are Disney (NYSE:DIS), Viacom (NASDAQ:VIA), News Corp (NASDAQ:NWSA)., Snap (NYSE:SNAP), Dropbox (NASDAQ:DBX), Roku (NASDAQ:ROKU), Canada Goose (NYSE:GOOS), Office Depot (NASDAQ:ODP), CVS Health (NYSE:CVS), Papa John's (NASDAQ:PZZA), and Match Group (NASDAQ:MTCH).
4. Dollar Stands Tall After Jobs Data
Away from equities, the U.S. dollar edged higher after the latest U.S. jobs report underlined expectations for the Federal Reserve to stick to a gradual pace of rate hikes this year.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, inched up 0.1% to 95.15, re-approaching the more than one-year peak of 95.44 hit on July 19.
In the bond market, U.S. Treasury prices ticked higher, pushing yields slightly lower across the curve, with the benchmark 10-year yield falling to 2.95%, while the Fed-sensitive 2-year note dipped to 2.65%.
On the data front, the calendar is thin today, with no top-tier reports on deck.
Inflation reports are the top economic releases in the week ahead, with producer price inflation data Thursday and the more important consumer price index Friday.
5. New U.S. Sanctions Against Iran Kick In
Despite opposition from European allies, the White House is set to make an announcement this morning detailing the reimposition of U.S. sanctions on Iran that were overturned by an historic nuclear deal in 2015.
A U.S. Treasury official, speaking on condition of anonymity, said so-called "snapback" sanctions will be reimposed at 12:01AM ET on Tuesday after businesses were given 90 days to wind down their activities.
The first wave of sanctions are set to affect Iran's purchases of U.S. dollars, its trade in gold and precious metals, and its dealings with metals, coal and industrial-related software. U.S. sanctions on Iran's oil are due in November.
The sanctions are being reinstated after U.S. President Donald Trump pulled the U.S. out of a 2015 deal between world powers and Tehran under which international sanctions were lifted in return for curbs on its nuclear program.
Brent crude futures rose 31 cents to $73.52, while U.S. crude oil futures added 28 cents to $68.77 a barrel.