Market Analysis

Muted futures Harris on what's influencing markets in the U.S. Steel-Nippon Steel bid

Amos Simanungkalit · 03 Sep13.4K Views

1. Futures Muted as Wall Street Starts September

U.S. stock futures were largely flat on Tuesday, signaling a quiet start to September trading after a turbulent August. By 07:26 GMT (03:26 EST), Dow futures had dipped by 44 points or 0.1%, S&P 500 futures were nearly unchanged, and Nasdaq 100 futures slipped by 14 points or 0.1%.

Following the Labor Day holiday closure on Monday, U.S. markets had ended Friday's session on a positive note, closing August in the green. Despite early concerns over a potential U.S. recession that caused the S&P 500 to drop by over 7%, the index managed to recover and finish the month up by 2.3%—marking its fourth consecutive monthly gain. The Dow Jones Industrial Average and Nasdaq Composite also saw gains of 1.8% and 0.7%, respectively.

2. Kamala Harris Opposes U.S. Steel-Nippon Steel Merger

Democratic presidential candidate Kamala Harris has expressed her intent to block a proposed $14.9 billion acquisition of U.S. Steel by Japan's Nippon Steel. During a campaign stop in Pennsylvania, a key battleground state for the 2024 election, Harris emphasized that U.S. Steel is a "historic American company" that should "remain American-owned and American-operated."

Harris's stance mirrors objections previously voiced by President Joe Biden, with whom she currently serves as Vice President. Former President Donald Trump, her Republican challenger, has also vowed to prevent the deal. This bipartisan opposition aligns with concerns from the United Steelworkers union, which has raised alarms about potential risks to national security and the domestic workforce if the merger goes through. Despite these objections, both U.S. Steel and Nippon Steel continue to support the merger, arguing it would benefit the U.S. steel industry.

3. Tesla Plans to Introduce Six-Seat Model Y in China

Tesla is reportedly planning to launch a new six-seat version of its popular Model Y vehicle in China by late 2025, according to Reuters. This initiative is part of Tesla's broader strategy to revamp its best-selling electric vehicle (EV) and increase its competitiveness in China’s rapidly growing EV market.

Tesla has instructed its suppliers to prepare for a significant uptick in Model Y production at its Shanghai plant, which is awaiting approval for an expansion on adjacent land. Although details on the planned production increase are not yet clear, Tesla has already seen a 6% year-on-year rise in deliveries of the Model 3, both domestically and internationally, in the first half of this year. Notably, August marked Tesla's best sales month in China so far this year, with a 37% increase from July in the world’s second-largest economy.

4. Brazil's President Supports Ban on Musk’s X Platform

Brazilian President Luiz Inácio Lula da Silva has backed the country's Supreme Court's decision to maintain a ban on Elon Musk's X social media platform. In an interview with CNN Brasil, Lula stated that the "world is not obliged to endure Musk's far-right ideology just because he is wealthy."

On Monday, a panel of Brazil’s high court judges unanimously supported the ban on X, following Supreme Court Justice Alexandre de Moraes’s ruling over the weekend. De Moraes cited the platform's non-compliance with hate speech regulations as the reason for the shutdown. Musk responded on X, labeling de Moraes a "dictator," while billionaire investor Bill Ackman warned that the ban could make Brazil "uninvestable."

Investors are also concerned about de Moraes’s separate order to freeze Brazilian bank accounts belonging to Musk's Starlink satellite business, following X’s failure to pay fines for not complying with judicial orders.

5. Crude Prices Near Two-Month Highs

Crude oil prices fluctuated on Tuesday as traders weighed sluggish economic data from China, the world's largest crude importer, against production and export disruptions in Libya. By 03:15 ET, Brent crude had dipped by 0.1% to $77.42 per barrel, while U.S. crude futures (WTI) edged up by 0.2% to $74.17 per barrel, with no settlement on Monday due to the U.S. Labor Day holiday.

China's purchasing managers' index fell to a six-month low in August, signaling potential weakening demand from the world's top crude importer. However, oil prices received some support as Libya halted oil exports at major ports on Monday and curtailed production across the country.