Trade war heats up; Chip deal; Apple event

Posted June 3, 2019 5:27 a.m. EDT

— 1. Trade war escalates: The trade war between the United States and China is heating up just as President Donald Trump threatens new tariffs on goods from Mexico. For markets, that's a tough pill to swallow.

US stock futures point to a difficult start to the week after the Dow finished below 25,000 for the first time in four months on Friday. Dow futures were down 120 points on Monday, or 0.5%. The S&P 500 is poised to drop 0.4%, while the Nasdaq could shed 0.5%.

China increased tariffs on $60 billion worth of US goods last week in retaliation for the latest hike from the United States. In an official document released Sunday, Beijing blamed the United States for the breakdown in trade talks and said it will "not back down."

Meanwhile, the Trump administration is standing by the president's threat to impose a 5% tariff on all goods from Mexico starting June 10. Mexico's economy secretary is set to meet with US Secretary of Commerce Wilbur Ross Monday in Washington.

Trump has also taken aim at India. He announced Friday that he will remove the country from a special trade program on Wednesday.

US stock declines would follow losses in Asia. Hong Kong's Hang Seng index finished flat on Monday, but the Shanghai Composite index dipped 0.3%. Tokyo's Nikkei lost 0.9%.

European markets also opened down. Britain's FTSE 100 was off 0.9% and Germany's DAX dropped 0.5%.

Investors continue to flee to the safety of US government debt, driving the 10-year Treasury yield down to 2.09%, the lowest level in nearly two years.

2. Chip deal: Germany's Infineon Technologies said Monday that it's buying US chipmaker Cypress in a deal that values the company at $10 billion.

The tie-up could help Infineon become a bigger player in chips used to power connected devices such as cars. But the price of the merger is raising eyebrows. Infineon shares fell more than 6% in early trading Monday.

3. Apple's WWDC: Apple's annual developers conference, known as WWDC, kicks off Monday in California.

The company is expected to preview new software features coming to iPhones, iPads, Macs and the Apple Watch. That could include improved health tracking tools and a dark mode on iOS devices.

Apple could also put iTunes, its main application for all music and video content, out of commission. The decision would not be a huge surprise. Apple has already broken out music into its own app while investing heavily in content and partnerships for a revamped TV app.

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4. Coming this week:Monday — Apple's WWDC begins; US, German and Chinese manufacturing dataTuesday — Tiffany & Co, Lands' End and GameStop earningsWednesday — EIA crude oil inventories; US services data; American Eagle Outfitters and Campbell Soup earningsThursday — ECB and Reserve Bank of India rate decisions; Europe's GDP growth estimate; Beyond Meat earningsFriday — US jobs report