Wall Street Tumbles on Geopolitical Concerns
U.S. equity futures retreated as Hong Kong’s political and Argentina’s financial scenario dented investor sentiments. The Hong Kong international airport, known to be one of the busiest cargo airports, was shut down due to heavy protests. In fact, almost 5,000 protestors flooded the airport, leading to the cancellation of many flights.
Protestors are opposing a proposal that would allow extradition to mainland China, something that would threaten their judicial protection. Protestors also want Hong Kong leader Carrie Lam to officially withdraw the extradition bill.
Argentina, by the way, added to the tensions. The Argentine stock market recently slumped more than 30% after market-friendly President Mauricio Macri lost the Presidential primaries by a much wider margin than expected.
While Macri and his running mate Miguel Angel Pichetto garnered 32.1% of the votes, their opposition center-left Alberto Fernandez, whose running mate is populist ex-leader Cristina Fernandez de Kirchner, received 47.7%.
Markets, by the way, have already been plagued by U.S.-China trade tensions. Trump has said that a near-term deal with China on tariffs is unlikely anytime soon. He also said that he may cancel the upcoming September meeting of Sino-American trade negotiators. The United States might impose 10% tariffs on $300 billion of Chinese products starting Sep 1.
However, it is widely expected that the latest round of tariffs won’t have much of an impact on inflation, per Wells Fargo & Company WFC. The bank said that “the inflation backdrop remains tame, as we look ahead to the second half of the year. We estimate the latest round of tariffs would add a little over 0.1 percentage points to the year-over-year rate of CPI inflation.” The Labor Department will report July’s Consumer Price Index (CPI) on Aug 13.
On the corporate earnings front, Tilray, Inc. TLRY, which engages in the research, cultivation, processing and distribution of medical cannabis, is set to report earnings on Aug 13, after market close.
From global marijuana legalization to the rapidly increasing use of CBD as a wellness product, all of this should help Tilray report promising numbers. Lest we forget, the United States had legalized hemp and hemp-related products last year, opening up opportunities for Canadian producers. The Zacks Consensus Estimate calls for second-quarter sales growth of more than $40 million from the year-ago $9.7 million.
Shares of Advance Auto Parts, Inc. AAP, by the by, fell in premarket action after reporting second-quarter earnings and sales miss.
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