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Dow Futures Suffer Monday Blues Ahead of Critical Trade Deadline

Mark Emem
Last Updated September 23, 2020 1:20 PM
  • Trump could be digging in for a longer trade war with China.
  • The December 15 deadline is set to determine the direction of the Dow and the stock market.
  • Imposing another round of tariffs could trigger a market sell-off, per analysts.

Dow Jones Industrial Average (DJIA) futures slipped by 28 points in Monday’s pre-market trading hours as the December 15 tariff deadline approaches. The drop suggests that investors are uneasy that the US-China trade war is unlikely to be resolved any time soon.

President Donald Trump has previously warned that if the two countries fail to reach an agreement by December 15th, a new round of tariffs will be imposed on Chinese imports worth $160 billion. White House’s National Economic Council director, Larry Kudlow, last week disclosed that Trump would make the final decision .

Dow futures slip by 28 points

Ahead of Monday’s trading session, Dow Futures contracts slid by 28 points or 0.10%. This follows a surge on Friday which saw the Dow go up by over 300 points or 1.22%. The surge followed a blowout jobs report that saw the US economy add 266,000 new jobs in November.

Dow futures chart | Source: Yahoo Finance

Alongside the Dow futures, other major indices also recorded slight losses ahead of the market open. The S&P 500 futures slid by 0.07%. The Nasdaq Composite futures went down by 0.38%.

Trump the Grinch that will ruin the Santa Claus rally?

Analysts have speculated that if the tariffs on $160-billion worth of Chinese goods go on to be implemented, the market might take a bearish turn. According to Manulife Investment Management’s Sue Trinh  such as a move would turn Trump into the “Grinch that stole Christmas”. The stock market has traditionally rallied during the holiday period and into the New Year.

While there had been expectations that the US and China would reach a partial deal, hopes are now fading. Just last week, Trump indicated he was comfortable with waiting out China  until after the 2020 general election:

In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.

Some analysts have also argued that the impressive November jobs report gives Trump more leverage over China. Consequently, CNBC’s “Mad Money” host Jim Cramer has urged the US president to go ahead and impose the tariffs .