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US Market
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The major U.S. index futures are pointing to a modestly lower opening on Tuesday following the notable upward move seen in the previous session.
Traders may cash in on yesterday?s gains after the U.S. proposed new tariffs on more European goods as part of an ongoing dispute over aircraft subsidies.
The U.S. Trade Representative issued a supplemental list of approximately $4 billion worth of products that could potentially be subject to additional duties.
In response to public comments and additional analysis, the USTR is adding the supplemental list to an initial list of $21 billion worth of products published on April 12.
The threat of additional tariffs comes as the U.S. and the European Union have been engaged in a long-running World Trade Organization dispute regarding EU aircraft subsidies.
While the U.S. and China have agreed to restart stalled trade talks, the news is a reminder that President Donald Trump is fighting a trade war on multiple fronts.
Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.
After moving sharply higher at the start of trading on Monday, stocks gave back some ground over the course of the session but managed to end the day firmly in positive territory. With the upward move on the day, the S&P 500 finished the session at a new record closing high.
The major averages all ended the day higher, although the tech-heavy Nasdaq outperformed its counterparts. While the Nasdaq surged up 84.92 points or 1.1 percent to 8,091.16, the Dow rose 117.47 points or 0.4 percent to 26,717.43 and the S&P 500 climbed 22.57 points or 0.8 percent to 2,964.33.
The initial strength on Wall Street came after President Donald Trump and Chinese President Xi Jinping agreed to restart stalled trade negotiations.
Trump met with Xi on the sidelines of the G20 summit in Osaka, Japan, over the weekend, telling reporters the meeting was "excellent, as good as it was going to be" and "we're right back on track."
In his closing G20 press conference, Trump revealed that he would not follow through on threats to raise tariffs on all remaining Chinese imports "at least for the time being."
The president also suggested that the U.S. would allow American companies to sell products to Chinese tech giant Huawei that do not pose national security concerns.
In return for holding off on tariffs and loosening restrictions on sales to Huawei, Trump said China has agreed to purchase large quantities of U.S. agricultural products.
Trump noted that existing tariffs on Chinese imports would remain in place, suggesting the U.S.-China trade dispute could still act as headwind to the global economy unless the conflict is eventually resolved.
"The quality of the transaction is far more important to me than speed," Trump said in a post on Twitter. "I am in no hurry, but things look very good!"
The early buying interest was partly offset by a report from the Institute for Supply Management showing a continued slowdown in the pace of growth in U.S. manufacturing activity in the month of June.
The ISM said its purchasing managers index edged down to 51.7 in June after slipping to 52.1 in May, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to dip to 51.0.
With the continued decrease, the index dropped to its lowest level since hitting a matching reading in October of 2016.
"Comments from the panel reflect continued expanding business strength, but at soft levels; June was the third straight month with slowing PMI expansion," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
"Respondents expressed concern about U.S.-China trade turbulence, potential Mexico trade actions and the global economy," he added. "Overall, sentiment this month is evenly mixed."
Semiconductor stocks gave back some ground after an initial spike but remained substantially higher throughout the session. The Philadelphia Semiconductor Index surged up by 2.7 percent to its best closing level in nearly two months.
Skyworks Solutions (SWKS) and Qorvo (QRVO) turned in two of the semiconductor sector's best performances on the news of Trump easing restrictions on the sale of products to Huawei.
Software, networking, and computer hardware stocks also saw significant strength on the day, contributing to the jump by the tech-heavy Nasdaq.
On the other hand, gold stocks moved sharply lower over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 3.7 percent. The sell-off by gold stocks came amid a steep drop by the price of the precious metal.
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U.S. Economic Reports
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No major U.S. economic data is scheduled to be released today, although Cleveland Federal Reserve President Loretta Mester is due to deliver a speech on the economic outlook at the European Economics and Financial Centre in London, England, at 11 am ET.
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Europe
European shares are experiencing choppy trading on Tuesday after the U.S. government threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.
The U.S.-China truce optimism also faded, with Trump now saying that any trade deal with China would need to be somewhat tilted in favor of the United States.
While the German DAX Index is just below the unchanged line, the French CAC 40 Index is up by 0.1 percent and the U.K.?s FTSE 100 Index is up by 0.5 percent.
Galapagos shares have jumped after the Belgo-Dutch pharmaceutical research company announced it would submit its drug filgotinib as a treatment for rheumatoid arthritis to the FDA this year.
Brewer Anheuser-Busch InBev SA has also moved to the upside as it kicked off an initial public offering for its Asia Pacific unit.
L'Oréal is also posting a notable gain. The French luxury goods and cosmetics company said it is in exclusive negotiations for the acquisition of Mugler and Azzaro from the Clarins Group.
On the other hand, advertising giant WPP has fallen after the company confirmed it has entered into exclusive discussions to sell a majority shareholding in Kantar to Bain Capital for a headline enterprise value of about $4 billion.
Jupiter Fund Management has also slumped after the company said it is considering naming Devon Equity as an adviser for its European Opportunities Trust.
In economic releases, German retail sales climbed 4.0 percent year-on-year in Ma, after a 4.6 percent increase in April, official data showed. Economists had forecast a 2.7 percent increase.
U.K. house prices rose 0.5 percent year-on-year in June following a 0.6 percent increase in May, data from Nationwide Building Society showed. Despite the slowdown, the increase exceeded estimates for a 0.2 percent uptick.
Separately, survey data from IHS Markit revealed the U.K. construction sector contracted the most in more than a decade in June.
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Asia
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Asian stocks ended mixed on Tuesday as weak global manufacturing data rekindled worries on slowing growth and the U.S. proposed new tariffs on European goods as part of a continuing dispute over aircraft subsidies.
Chinese shares ended little changed after U.S. President Donald Trump said on Monday that trade talks with China have "already begun" but any deal would need to be somewhat tilted in Washington's favor.
Hong Kong shares rose sharply as markets reopened after a holiday on Monday. The Hang Seng Index rallied 332.94 points or 1.2 percent to 28,875.56 despite protesters storming and vandalizing the legislative building in the city.
Japanese shares finished marginally higher on skepticism over whether the United States and China can reach a deal to end their bitter trade dispute.
The Nikkei 225 Index inched up 24.30 points or 0.1 percent to 21,754.27 after rallying more than two percent the previous day. The broader Topix closed 0.3 percent higher at 1,589.84.
Exporters rose broadly on a slightly weaker yen. Tech stocks also continued to gain, with Tokyo Electron climbing 3 percent and Advantest rising 0.8 percent. Oil company Inpex Corp declined 1.2 percent and Japan Petroleum eased 0.4 percent.
Australian markets gave up early gains to end on a flat note as the country's central bank lowered the cash rate to a fresh low of 1 percent, as widely expected.
"This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target," the bank said in a statement.
The benchmark S&P/ASX 200 Index inched up 5.10 points or 0.1 percent to 6,653.20, while the broader All Ordinaries Index edged up 9.70 points or 0.1 percent to 6,741.10.
Mining heavyweights BHP and Rio Tinto climbed 0.9 percent and 1.6 percent, respectively, after iron ore prices reached a record high on Monday. Healthcare stocks such as CSL, Cochlear and Resmed gained between 0.7 percent and 1 percent.
The big four banks fell over 1 percent each as the Reserve Bank's monetary policy statement didn't indicate a drastic dovish turn.
Afterpay Touch soared 6.9 percent after the payments platform operator appointed Anthony Eisen as its chief executive and managing director.
Vitamin and supplement maker Blackmores rallied 2.1 percent as it appointed former Nestle, Gillette and P&G executive Alastair Symington as its new chief executive and managing director.
Meanwhile, Seoul stocks closed lower on economic concerns after Japan moved to cut off materials vital to South Korea's all-important tech industry. The Kospi slid 7.72 points or 0.4 percent to 2,122.02.
Market bellwether Samsung Electronics shed 0.8 percent, pharmaceutical firm Celltrion declined 1.4 percent, chemical firm LG Chem slumped 1.8 percent and automaker Hyundai Motor lost 2.8 percent.
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Commodities
Crude oil futures are slipping $0.17 to $58.92 barrel after climbing $0.62 to $59.09 a barrel on Monday. Meanwhile, after plunging $24.40 to $1,389.30 ounce in the previous session, gold futures are rising $4.60 to $1,393.90 an ounce.
On the currency front, the U.S. dollar is trading at 108.24 yen compared to the 108.45 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1293 compared to yesterday?s $1.1286.
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