S&P 500 Future Reverses as US Said to Ready Tariffs
By: Eddy Peng Jul 11, 2018
U.S. equity futures set to reverse and erased gains after there’s a reveal by an anonymity that the Trump administration is preparing to impose tariffs on an additional $200 billion in Chinese goods by releasing a list of targeted products, escalating a trade war that may soon directly hurt American consumers and even undermine global economic recovery.
The intraday S&P 500 Futures was down to 2773.4 as of 12:00 p.m. in Sydney on Wednesday, ending the longest earning streak since the beginning of June. While the 10-year Treasury yield continues to fall to 2.84 percent in the early trading session.
If the plan for tariffs proposed Tuesday takes into effect, duties implemented by the administration aimed at China will cover nearly half of all U.S. imports from Asia. The proposed list of goods includes consumer items such as clothing, television components and refrigerators as well as other technology products, though it omitted some high-profile items like mobile phones.
What investors need to keep a close eye on is the U.S. June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up to 2.9 percent and 2.3 percent respectively, suggesting a robust economic condition.
On a daily chart, the broader outlook for the S&P 500 is still optimistic as it has been still moving in an ascending channel starting on late March. While the short-term movement has been impeded by a key resistance ahead near 2784.4, and if it continues to edge lower, the median line of Bollinger Bands may provide support for the index.
Chart 1: SPX500 Daily
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