FYI: U.S. stock index futures were positive in the early hours of Tuesday morning, after Wall Street saw its worst trading day of 2019 in the previous session.
At around 03:40 a.m. ET, Dow futures turned positive and rose 167 points, indicating a positive open of more than 34 points. Futures on the S&P and Nasdaq were also marginally higher.
U.S. equity markets saw their worst trading day of 2019 on Monday amid an escalation in the U.S.-China trade war. The sell-off had began last week when President Donald Trump announced new tariffs on Chinese goods. However, market reaction became even more negative when Chinese authorities let the yuan break to its lowest level against the dollar in more than 10 years on Monday.
European stocks wavered while Asian indexes pared earlier losses, as investors reconsidered China’s willingness to let its currency drop sharply.
The Stoxx Europe 600 was down 0.2%, with gains in the autos and media sectors offset by losses in food and beverage shares.
In Asia, major benchmarks in Japan, Hong Kong and South Korea had regained some ground, trimming losses. The Shanghai Composite was down 1.6%, while Australia’s main index was off 2.4%.
Global markets were roiled in the previous session as the yuan became the latest flashpoint in U.S.-China trade relations. The U.S. Treasury labeled China a currency manipulator after Beijing let the yuan depreciate beyond 7 to the dollar for the first time since 2008. A weaker yuan makes Chinese goods more competitive abroad, and U.S. products and other imports into China more expensive.
However, the yuan stabilized on Tuesday, supported by signs that Beijing might not permit a steep depreciation.
China’s central bank set the daily midpoint for onshore yuan trading at 6.9683, 0.7% weaker than the previous day but still stronger than 7. The People’s Bank of China also said it would issue 30 billion yuan ($4.25 billion) of central bank bills in Hong Kong—an act seen as limiting possible short-selling of the currency.
The yield on U.S. 10-year Treasury notes rose to 1.759% on Tuesday, from 1.738% on Monday, after earlier hitting its lowest since 2016. Bond yields fall as prices rise.
Yields on government bonds in Australia and Japan retraced some of their earlier declines, but both remained lower on the day. The Japanese yen, considered a haven currency, pulled back 0.5% to ¥107.05 to the dollar.
Several of the region’s largest blue-chip stocks hit multiyear lows, including Hong Kong-listed shares in Industrial & Commercial Bank of China and China Construction Bank, and CK Hutchison Holdings , the flagship conglomerate of Hong Kong tycoon Li Ka-shing. In Tokyo, they included Panasonic , Honda and Canon.
The Hang Seng’s decline set it on course to turn negative for the year, joining South Korea’s Kospi. However, the decline for Chinese internet giant Tencent Holding narrowed to 0.5%, as the market regained some footing.
Regards,
Ted
WSJ:
https://www.wsj.com/articles/global-stocks-fall-sharply-as-u-s-china-spat-over-yuan-escalates-trade-war-11565057744MarketWatch:
https://www.marketwatch.com/story/us-stock-futures-sink-suggesting-more-steep-losses-on-tuesday-2019-08-05/printBloomberg
https://www.bloomberg.com/news/articles/2019-08-05/stock-sell-off-to-hit-asia-as-trade-war-escalates-markets-wrapIBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-us-labels-china-currency-manipulator-yuan-devaluation-china-trade-war/CNBC:
https://www.cnbc.com/2019/08/05/dow-futures-fall-implying-a-200-point-drop-on-tuesday-as-trade-war-fears-batter-wall-street.htmlReuters:
https://uk.reuters.com/article/us-usa-trade-china-goldmansachs/goldman-sachs-sees-no-trade-deal-before-2020-u-s-election-now-expects-three-rate-cuts-idUKKCN1UW0PDU.K.
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-falls-again-on-china-worries-midcaps-outperform-idUKKCN1UW0MSEurope:
https://www.reuters.com/article/us-europe-stocks/european-shares-inch-higher-after-two-day-sell-off-idUSKCN1UW0NDAsia:
https://www.marketwatch.com/story/asian-markets-tumble-following-wall-streets-lead-2019-08-05?mod=asia-marketsBonds:
https://www.cnbc.com/2019/08/06/us-bonds-10-year-treasury-yield-in-focus-amid-us-china-trade-war.htmlCurrencies:
https://www.cnbc.com/2019/08/06/forex-markets-chinese-yuan-in-focus.htmlOil:
https://www.cnbc.com/2019/08/06/oil-markets-us-china-trade-in-focus.htmlGold:
https://www.cnbc.com/2019/08/06/gold-markets-us-china-trade-in-focus.htmlCuirrent Futures:
https://finviz.com/futures.ashx 
