More US tariffs; OPEC deal; Year’s biggest IPO

Posted at 3:13 AM, Jul 02, 2019
and last updated 2019-07-02 07:39:09-04

1. More US tariffs: Proposed US tariffs on European goods worth $4 billion are denting refreshed market optimism on trade.

The Trump administration has threatened new tariffs on 89 products, including meat, cheese, pasta, fruits, coffee and whisky, as part of its intensifying fight with the European Union over aircraft subsidies.

The penalties would be added to the tariffs on EU exports worth $21 billion announced in April.

Washington has been locked in a dispute with the European Union for years over the world’s biggest airplane manufacturers, Boeing and Airbus. Both sides have claimed the companies receive unfair government subsidies.

The tariffs could further complicate an important trading relationship at a tense moment.

The Trump administration has imposed tariffs on European steel and aluminum, to which EU authorities responded with tariffs on US goods worth more than $3 billion. The threat of US tariffs on foreign autos also looms.

2. OPEC deal: OPEC will restrict the supply of oil for another nine months in a bid to support prices pressured by weakening economic growth and skyrocketing American production.

After five hours of wrangling in at the cartel’s meeting in Vienna, the group unveiled an agreement Monday to extend production cuts until the end of March 2020.

Members also agreed in principle to formalize a charter for cooperation with non-member producers such as Russia despite objections from Iran.

OPEC said its decision was based in part on the fact that “economic bearishness is now increasingly prevalent” because of trade tensions, central bank policies and “geopolitical issues.”

Brent crude, the global benchmark, rose Tuesday before falling 0.3% to $64.84 per barrel. US oil prices dropped 0.5%.

3. Biggest IPO: The biggest IPO of the year won’t be Uber. Instead, that title could go to Anheuser-Busch InBev.

The company is looking to raise between $8.3 billion and $9.8 billion from a Hong Kong listing of its Asia business, according to Reuters. Uber raised $8.1 billion.

Such a marquee public offering would be good news for Hong Kong, with more attention focused so far this year on listings in New York.

It could also prepare the ground for another blockbuster listing for the Asian financial hub. Alibaba is reportedly looking to raise $20 billion through a secondary listing in Hong Kong.

4. Markets falter: The post-G20 cheer could be starting to fade.

The Dow, Nasdaq and S&P 500 are poised to fall slightly when markets open, just one day after the S&P 500 hit a new closing record.

That follows a mixed day for stocks in Asia. Hong Kong’s Hang Seng, which was closed Monday for a public holiday, rose 1.1%. But Japan’s Nikkei gained just 0.1%, and the Shanghai Composite dipped slightly.

Britain’s FTSE 100 climbed 0.3% in early trading, while France’s CAC 40 and Germany’s DAX fell 0.1%.

The Dow closed up 0.4% on Monday. The S&P 500 jumped 0.8% to its all-time high, while the Nasdaq rallied 1.1%.

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4. Coming this week:
Tuesday — German retail sales
Wednesday — US markets half day; US balance of trade for May
Thursday — US markets closed
Friday — US jobs report