Analysis
  • Futures on the Dow Jones Industrial Average are swimming in the red this Black Friday.
  • The stock market might have a bad day today if there is no clarity regarding a U.S.-China trade deal.
  • Black Friday sales numbers are expected to be weaker than last year, and this could spark more panic.

Futures on the Dow Jones Industrial Average (DJIA) are in the red Friday morning as the U.S.-China trade war continues to rage on. President Donald Trump’s move of supporting Hong Kong protests by signing a controversial bill into law took a heavy toll on the stock market yesterday.

The effects of that decision are spilling over into Black Friday morning as Trump’s latest move could invite the wrath of Beijing and derail a potential trade deal that was reportedly very close to being signed.

BBC reports that China is reportedly miffed with Trump’s action of signing the bill into law as it will embolden the protesters in Hong Kong and disturb the country’s domestic affairs. But Beijing might not let Trump’s decision get in the way of a potential trade deal as China is all set to face another round of tariffs on Dec. 15. The stock market will be hoping that Beijing doesn’t nix the trade deal, and that will be critical to where the Dow Jones ends the week.

Dow futures swim in red amid rising U.S.-China trade tensions

Dow futures are down 62 points, or 0.22 percent, to 28,087 points at 5.29 am ET. Dow futures plunged early in pre-market today as they were hovering at 28,045 points at 3.17 am ET. It appears that the chance of Beijing not walking away from the trade deal to avoid the next round of duties has given the stock market some hope.

chart showing dow jones futures.
Futures on the Dow Jones Industrial Average are swimming in the red this Black Friday, indicating a bad day lies ahead for the stock market. | Source: Yahoo! Finance

Futures on the S&P 500 are also down 0.21 percent, while Nasdaq Composite futures are down 0.28 percent.

A Black Friday ahead for the stock market

On a day when all eyes should be on Black Friday retail sales numbers, the stock market and the Dow will be desperately looking for signs of a trade deal. The BBC report adds that China’s anger with the U.S. over supporting the Hong Kong protests is nothing more than posturing.

Beijing might be more than willing to sign a deal to revive China’s flagging economy. But it remains to be seen if Chinese negotiators will give in easily as they can leverage the fact that American soybean farmers are eagerly waiting for a “phase one” deal to be signed before the availability of South American crops in 2020.

Soybeans from Brazil and Argentina are expected to hit the market in February next year. If a trade deal is not in place, American farmers could lose out and their stocks might remain unsold. Beijing could use this to its advantage to counter Trump’s decision of supporting Hong Kong protests.

In such a scenario, the Dow and the stock market will take a hit as further negotiations could push back the trade deal that the two sides are close to agreeing upon.

Meanwhile, Black Friday sales numbers are expected to decide the course of the Dow and the stock market for the ongoing holiday shopping season. The bad news is that Black Friday sales this year are expected to drop to $87 billion from $90 billion a year ago.

That’s despite the fact that there’s expected to be a jump of 12 percent in the number of Americans that are expected to take part in today’s sales. This indicates that Americans are going to remain tight-fisted this holiday season thanks to the ongoing economic uncertainty and the potential of a recession. The anticipated decline in Black Friday sales can also be attributed to the four straight months of decline in the Consumer Confidence Index.

In all, the Dow and the stock market could plunge once again today as there are a ton of headwinds to ensure a sad end to the week.

This article was edited by Samburaj Das.

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