US Stocks Set For Subdued Opening; Oil, Gold Up

The decline in Dow and Nasdaq futures Monday has set the tone for a low start to U.S. stock markets on Tuesday as well. The reversal, coming after straight gains of five weeks, may affect market mood ahead.

The low point of Monday that rattled market sentiments was the crash of Caterpillar shares, which fell 9.1 percent after the industrial giant expressed lower earnings for the fourth quarter.

Caterpillar sales fell in the Asia/Pacific region because of sinking demand in China. Caterpillar is heavily exposed to overseas markets.

Asian Market Low

The mood was downcast in Asian, stocks which traded lower on Tuesday afternoon following escalating concerns over the slowing of the Chinese economy and break out of renewed trade tensions sparked by the Huwaei charge sheet affecting investor sentiments.

The filing of criminal charges and extradition demand for Meng Wanzhou, the CFO of Chinese telecom major Huawei, renewed US-China trade tensions Monday.

Trade in mainland Chinese markets slipped during the morning session. The decline of the Shanghai composite by 0.5 percent and the Shenzhen composite crashing 1.366 percent was a big commentary on the market mood. The Hang Seng index of Hong Kong’s also lost 0.59 percent.

Japan’s Nikkei 225 lost 0.25 percent in afternoon trade while the Topix index shed 0.12 percent.

Australia’s ASX 200 too was down 0.5 percent with losses recorded in several sectors. Shares of Australia’s top four banks declined.

Oil Price Jumps

Oil prices jumped Tuesday with gains in Brent and U.S. crude futures. This followed U.S. sanctions on Venezuela’s government-owned oil company PDVSA in a bid to choke crude exports to the United States. Venezuela is part of the Saudi Arabia-led oil exporters club OPEC. The U.S. is a major export destination for Venezuelan oil despite the political tensions between them.

The crude futures of U.S. West Texas Intermediate (WTI) were up 0.3 percent to $52.12 per barrel at 0351 GMT. International Brent crude oil futures rose 12 cents, or 0.2 percent, and settled at $60.05 per barrel.

Gold Zooms To 7-Month High

Gold jumped to to $1,304.53 in morning trade and firmed up at $1,303.62 for an ounce by 0319 GMT. This was the yellow metals's highest price since June 14, 2018.

The seven-month high on Tuesday showed investors are shunning riskier assets. U.S. gold futures were steady at $1,302.70 per ounce.

“Investors are very cautious with many uncertainties on U.S.-China trade talks and Brexit. Those prospects don’t look positive,” noted analyst Margaret Yang of CMC Markets.