Stock futures drop on Broadcom warning, Chinese gloom
By Shreyashi Sanyal
(Reuters) – US stock index futures dropped on Friday, when the long-feared fight against global growth from President Trump's trade war crystallized into slashed sales forecasts by chipmaker Broadcom, and evidence of the worst downturn in Chinese industry for 1[ads1]7 years.
Shares in Broadcom Inc declined by 9.8% in premarket trading, having reduced the revenue forecast for $ 201 billion by $ 2 billion, and blamed the US-China trade conflict and export restrictions on Huawei Technologies Co., Ltd. [19659004] Data from China showed an increase in industrial production in the world's second largest economy, which fell in May beyond 17 years, and sent a chill through stock market investors globally.
Nasdaq 100 e-minis pointed to a 59.5 point drop, or 0.79% at opening while Dow e-minis deleted 52 points, or 0.2%, and S & P 500 e-minis 8.75 points, or 0.3%.
S & P has increased by 5% in June so far in the hope that the Federal Reserve will cut interest rates soon to fight slowin g global growth, a strong contrast to the steady path of monetary tightening until the end of last year .
Broadcom news was one of the clearest indications yet from the trade-sensitive technology sector in the scale of pain companies can expect from Washington stand-off with China.
Semiconductor's shares, which both source and sell heavily in China, tumbled with Intel Corp., Advanced Micro Devices Inc and Micron Technology Inc down between 2.2% and 4%. Stocks in Apple Inc also dropped 1.2%.
Next week's Fed meeting could give the market test of market expectations that the US central bank could cut prices as much as three times this year, while a group of 20 summits at the end of the month could still make more progress on a trade deal.
In the last salvo between the two sides, China said on Friday that it raised anti-dumping duties on certain alloy steel seamless tubes and tubes from the United States and the European Union by as much as 10 times.
On the macro front, the Ministry of Commerce's report on retail sales for May is expected to increase by 0.6% increase at 8.30 ET after a 0.2% decline in April.
(Reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru, Editing by Patrick Graham)
