Morning Brief: Dow Jones, DAX and FTSE 100 muted as US-China tensions rise


Dow Jones and S&P 500 index muted

American futures are unchanged as investors react to increasing trade tensions between the U.S. and China. Futures tied to the Dow Jones and the S&P 500 index are trading at $27,850 and $3,380, respectively. In a statement yesterday, the U.S. commerce department barred companies from supplying vital parts to Huawei, the Chinese telecom giant.

The new order will restrict all foreign semiconductor companies from selling chips developed using U.S. technologies to Huawei. According to CNBC, analysts say that the new rule poses existential risks to Huawei. Analysts believe it is likely China will respond in ways that could escalate tensions between the two countries.

All this is happening at a time when American firms like Microsoft and Oracle are bidding for Tik Tok, the giant social media company owned by Bytendance. The daily chart below shows that the Dow Jones has found strong resistance slightly below the $28,000 level.

Dow Jones
Dow Jones has been in a holding pattern

DAX index, FTSE 100, and CAC 40 mixed

European indices are mixed in the futures market. Futures tied to the DAX index, FTSE 100, and Stoxx 50 are in the red while those tied to the CAC 40 are up by about 0.15%. There is no direct catalyst for this price action but investors are watching the ongoing tussle between the US and China.

Also, investors are focusing on the upcoming earnings from key companies like Pandora, Home Depot, and Walmart. Also, analysts are watching the ongoing round of Brexit talks. The chart below shows that the DAX index has been in a holding pattern in the past few days.

Economic calendar muted

The economic calendar will be relatively muted today, with minimal major economic data. The only major economic release will come from the United States, where the Census Bureau will release the July building permits and housing starts data.

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DAX Index technical chart

DAX Index

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