Investing.com -- U.S. futures were set for another bumpy ride at the opening Tuesday, after China warned that it was ready to let trade talks with the U.S. collapse – at least temporarily.
“The Chinese public wants an agreement, but meanwhile is well prepared for other potential outcomes, including a temporary breakdown in talks,” said an editorial in the Global Times, an English-language publication that regularly serves as a mouthpiece for official Chinese foreign policy.
The comments came after U.S. Trade Representative Robert Lighthizer confirmed that the U.S. will raise tariffs on $200 billion worth of Chinese imports from 10% to 25% as of Friday, a step that sharply escalates the trade dispute between the two countries after months of talks that appeared to be making progress in avoiding such an outcome.
Dow futures were down 125 points or 0.5% by 6:50 AM ET (1050 GMT), while S&P 500 futures lost 15 points or 0.5% and the tech-heavy Nasdaq 100 futures was down 46 points or 0.6%.
The same concerns about trade wars and global growth led U.S. crude oil futures to dip as low as $61.64 a barrel, down nearly 1% from late Monday.
“Overall, markets appear to be taking a sanguine view on the Trump China trade deal 'tweets' after the initial 'helter skelter',” said Marc Ostwald, a strategist with ADM ISI in London. He suggested markets are interpreting President Trump’s tweets as an attempt to ‘game’ China in the final stages of the negotiation, and part of a routine aimed at squeezing maximum capital out of any deal that is ultimately agreed – “even if the details of any deal that may be reached may well be very meagre fare.”
Tuesday’s earnings schedule is dominated by the health sector, with Allergan (NYSE:AGN), Mylan (NASDAQ:MYL) and Regeneron (NASDAQ:REGN) all set to report before the open.
Earlier in Europe, Anheuser Busch Inbev (NYSE:BUD) fell 2.1% after its first-quarter sales and profit both fell short of expectations, due largely to currency headwinds. The company said it’s looking at a partial sale of its Asian brewing operations through an IPO, in order to pay down a debt burden that investors still see as worryingly high.
Elsewhere in commodities, gold futures were little changed at $1,282.65 a troy ounce, while in the currency market, the U.S. dollar index, which measures the greenback against a basket of six major currencies, was also effectively flat at 97.21.