Futures on the Dow Jones Industrial Average (DJIA) posted narrow gains in aftermarket trading Wednesday, as the threat of an escalating trade war between the United States and China continued to weigh.
Dow Futures Rise; S&P 500, Nasdaq Follow
Futures contracts on all three major U.S. indexes rose slightly in overnight trading, with the Dow Jones mini climbing 57 points, or 0.2%. S&P 500 futures added 0.3% and the Nasdaq 100 contract climbed 0.3%.
Equities declined sharply in Tuesday trading, with the Dow closing off more than 300 points. The selloff stoked a massive surge in the CBOE VIX, the market’s preferred measure of investor anxiety. The so-called “fear index” climbed 13.6% to 20.28, putting it right around the historic mean.
Under normal circumstances, a VIX reading above 20 is a bellwether for volatile trading conditions over the next 30 days.
U.S.-China Trade War in Focus
Hopes of a swift resolution to the U.S.-China trade war were quickly dashed Monday after Beijing’s top negotiator, Liu He, said industrial policies and government subsidies were off the table at this week’s summit in Washington. By narrowing the scope for the upcoming trade talks, China has all but eliminated the possibility of a comprehensive agreement being finalized this week.
The two countries are scheduled to meet on Thursday for face-to-face meetings.
Meanwhile, the United States has broadened its visa restrictions on Chinese officials and added more Chinese companies to its trade blacklist. If both sides fail to reach common ground over the next few days, the Trump administration will likely move ahead with planned tariff hikes on $250 billion worth of Chinese goods.
Asian equity markets reflected that uncertainty Wednesday, with Japan’s Nikkei 225 index falling 0.7%. Stocks in mainland China were off by about 0.2%. Hong Kong’s benchmark Hang Seng Index also fell 0.2%.
In addition to the trade war, U.S. monetary policy is back in the spotlight Wednesday as the Federal Reserve releases the minutes of last month’s meetings. In September, Fed officials voted to lower interest rates for the second time in as many meetings, citing trade-war concerns as one of the primary catalysts.