Premarket: Wall Street futures dip as U.S.-China tensions weigh, banks kick off earnings season

Canada’s main stock index opened higher on Tuesday, signaling a recovery after Friday’s sharp decline due to renewed U.S.-China tensions that triggered profit-taking across the market.

At 9:31 a.m. ET, Toronto’s S&P/TSX composite index was up 0.5 per cent at 30010.39 points, as investors returned to trading following Canada’s Thanksgiving holiday on Monday. 

The index posted its steepest drop in six months on Friday after U.S. President Donald Trump issued a series of threats against China in response to Beijing’s tightening of rare earth export restrictions.

However, market sentiment improved slightly after Trump adopted a more conciliatory tone over the weekend. Despite this moderation in rhetoric, both countries implemented additional port fees on Tuesday on shipping companies transporting goods ranging from consumer products to crude oil, indicating ongoing trade frictions.

Wall Street’s main indexes opened lower on Tuesday with renewed trade tensions between U.S. and China souring sentiment, while investors also parsed results from big U.S. banks that kicked off the third-quarter earnings season.

The Dow Jones Industrial Average fell 195.7 points, or 0.42%, at the open to 45,871.89. The S&P 500 fell 52.2 points, or 0.78%, to 6,602.49 , while the Nasdaq Composite dropped 306.6 points, or 1.35%, to 22,388.043.

BlackRock’s hit a record US$13.46-trillion and JPMorgan Chase raised its full-year forecast for net interest income after beating expectations for third-quarter profit. BlackRock’s shares rose 1 per cent in early trading and JPMorgan dipped 1.1 per cent.

Goldman Sachs fell 3.7 per cent despite beating Wall Street expectations for quarterly profit.

Citigroup and Wells Fargo shares bucked the trend to rise 0.8 per cent and 3.9 per cent after reporting quarterly results.

“The most important thing to think about is not the actual earnings, which in large part were better across the board … but all of them are also trading at or near all-time highs,” said Art Hogan, chief market strategist at B Riley Wealth, on why many lenders’ shares were lower despite reporting strong quarterly results.

The earnings reports will help investors assess the impact of tariffs on corporate America and offer fresh clues on the economy at a time when major official data releases remain delayed due to an ongoing government shutdown.

Analysts on average expect S&P 500 companies’ third-quarter earnings to grow 8.8 per cent from a year ago, according to LSEG data.

Markets had rebounded in the previous session after President Donald Trump’s conciliatory tone on trade tensions with China as well as Treasury Secretary Scott Bessent’s comments that the U.S.-China meet later this month remained on track.

On Tuesday, Washington and Beijing began charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil, reviving trade frictions.

Trump’s threats to impose additional 100% tariffs on Chinese goods on Friday over Beijing’s rare earths export controls injected volatility back into markets and knocked Wall Street’s main indexes off their record levels.

The AI-driven momentum and optimism around U.S. rate cuts have driven stock markets to record highs.

On Tuesday, investor focus will also be on Federal Reserve Chair Jerome Powell’s speech at the NABE annual meeting for further insight into the U.S. central bank’s monetary policy path.

China’s Commerce Ministry said Tuesday it was banning dealings by Chinese companies with five subsidiaries of South Korean shipbuilder Hanwha Ocean, swiping at President Donald Trump’s efforts to rebuild the industry in America.

“China just weaponized shipbuilding,” said Kun Cao, deputy chief executive at consulting firm Reddal. “Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance.”

South Korea and the U.S. have been building closer ties in shipbuilding in response to China’s dominance as the world’s largest shipbuilder. Hanwha acquired the Philly Shipyard in Pennsylvania last year and has contracts with the U.S. Navy to perform maintenance, repair and overhaul work for U.S. naval vessels.

Hanwha Ocean’s shares fell 5.8 per cent in Seoul on Tuesday and the benchmark Kospi lost 0.6 per cent to 3,561.81.

International shipping and shipbuilding have become a major source of friction between Washington and Beijing, with each side imposing new port fees on each others’ vessels. Those fees went into effect on Tuesday.

Anxiety over increasingly strained U.S.-China relations also pulled bitcoin and other cryptocurrency investments lower. Bitcoin lost another 3.6 per cent Tuesday to $111,227.50. The original cryptocurrency is down more than 10 per cent from last week.

Ethereum, the second-most valuable digital coin, fell 7 per cent, while bitcoin ETFs were down between 3 per cent and 6 per cent across the board.

Markets had calmed Monday after Trump wrote on his Truth Social media platform Sunday, “Don’t worry about China. On Friday, Trump helped spur a sell-off after he threatened to hike tariffs on China by 100 per cent in reaction to Beijing’s latest controls on exports of rare earths.

Elsewhere, in Europe at midday, France’s CAC 40 declined 1.1 per cent, while the German DAX lost 1.4 per cent. Britain’s FTSE 100 shed 0.3 per cent.

During Tuesday trading, Japan’s benchmark Nikkei 225 dropped 2.6 per cent to finish at 46,847.32. The slide reversed a rally last week in Tokyo after conservative lawmaker Sanae Takaichi was chosen to lead the country’s ruling Liberal Democratic Party.

The subsequent collapse of the LDP’s 26-year-old coalition with the Buddhist-backed Komeito has cast doubt over whether Takaichi will become Japan’s first female prime minister and added to political uncertainty.

The renewed sense of unease over the state of China-U.S. trade tensions pulled benchmarks in Hong Kong and Shanghai lower.

Hong Kong’s Hang Seng lost 1.7 per cent to 25,441.35, while the Shanghai Composite shed 0.6 per cent to 3,865.23.

Australia’s S&P/ASX 200 rose nearly 0.2 per cent to 8,899.40.

In energy trading, benchmark U.S. crude lost $1.36, about 2.3 per cent, to $58.13 a barrel. Brent crude, the international standard, fell $1.37 to $61.93 a barrel.

Reuters and The Associated Press