US stocks trade mixed, trade tensions continue to weigh

Major US equity indices witnessed a mixed opening on Friday as investors remained cautious amid persistent trade conflicts between the world’s two largest economies.

The US-China trade war fears escalated further after the new US tariffs on $34 billion worth of Chinese imports officially went in force on Friday and China retaliated by imposing tariffs to the same value of US goods at the same rate.  

Meanwhile, an additional tariff on another $16 billion is expected to go into effect in two weeks. With the US President Donald Trump instructing to identify additional $300 billion of possible Chinese goods, a potential full-blown global trade war was seen as weighing on economic growth and kept investors away from perceived riskier assets – like equities.

The negative factor, to some extent, was offset by better-than-expected headline NFP print, indicating that fundamental remained strong despite the ongoing uncertainty over trade policies and helped limit any deeper losses.  

The US economy added 213K new jobs in June, better-than 195K expected, and the readings for May and April were also revised higher. Meanwhile, the unemployment rate ticked higher to 4% from 3.8% previous but was largely negated by shrinking US trade deficit, which slipped to a 19-month low in May.  

With underlying market fundamentals still strong, escalating trade tensions might keep investors on edge and continue infusing volatility across global financial markets. Nevertheless, all the three major indices remain on track to post subdued gains for the holiday-shortened week.