U.S. Opening Bell: Iran ‘End Of Diplomacy,’ FedEx Lawsuit Hit Stocks, Boost Gold

London (June 25)  Futures on the S&P 500, Dow and NASDAQ 100 tracked global stocks lower this morning after both U.S.-China and U.S.-Iran tensions reached a new peak. Increased demand for safe havens boosted gold and the yen, while sending yields on 10-year Treasurys back to 2.00%.

In Europe, losses affecting almost all sectors pushed the STOXX 600 into a third-day slide.

In the earlier Asian session, regional shares reversed gains on a report Iran said new U.S. sanctions would mean "the permanent closure of the path of diplomacy,” spurring investor search for safety.

China’s Shanghai Composite dropped 0.87% ahead of the crucial Trump-Xi talks, where a lot could go wrong. Complicating the matter was a move from U.S. shipping company FedEx (NYSE:FDX) this morning to sue the U.S. Commerce Department over export restrictions on Huawei, in the wake of criticism from Chinese officials on Monday on how the U.S. shipper recently mishandled product deliveries from the Chinese telecom giant.

Technically, the Chinese benchmark slipped back below the 50 DMA, while finding support above the 100 DMA as it potentially completes a rounding bottom—which is itself supported by the 200 DMA.

The Chinese yuan weakened for a third day, after the USD/CNY pair found support above the 50 DMA and 200 DMA amid a golden cross. This suggests a continued weakening for the yuan, which in turn could potentially exacerbate trade talks further.

For its part, Hong Kong’s Hang Seng (-1.15%) underperformed ahead of the much-anticipated meeting between Trump and his Chinese counterpart Xi Jinping, which comes at a time when U.S. lawmakers have been urged to consider sanctions against Hong Kong—a Special Administrative Region of the Chinese state—and China ruled out discussing the thorny issue at the G20 summit.

South Korea’s KOSPI contained losses to 0.22%, ranking second best after Australia’s S&P/ASX 200 (-0.11%). The Korean benchmark may soon benefit from an interest rate  cut after the yield curve inversion between the country's long-term bonds and the overnight policy rate widened to an all-time high.


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