Pre-Market Primer: Anti-Japanese Protests in China Could Hurt Global Economy

By Vincent Trivett  SEP 17, 2012 8:55 AM

Obama is also banging the trade-war drums.


MINYANVILLE ORIGINAL Anti-Japanese protests in China turned violent this weekend. Protests over the Japanese government's claim to what the Chinese call the Diaoyu Islands resulted in riots. Factories that do business with Japan were shuttered for safety concerns. As Chinese trashed stores and destroyed Toyota (TM) vehicles, shares of Japanese stocks sold off in Chinese markets on fears that Beijing might also retaliate against Japanese manufacturing interests. China and Japan enjoyed $345 billion in two-way trade last year, which could be in jeopardy.

Chinese stocks didn't fare much better in Asian trading today. Citigroup analysts cut cut their growth forecast for China on Friday. The bank lowered its GDP forecast for the country to 7.6% from 8%. It also came out that US President Barack Obama will launch a trade complaint in the WTO over the Chinese government's backing of the auto industry. The complaint says that China imposes $3 billion in tariffs on US auto imports and unfairly subsidizes its domestic industry.

Stock futures pared last week's gains today. Dow (^DJI) futures fell 0.24% to 13,485. Down from a five-year high, S&P 500 (SPY) futures are down 0.30% to 1,454.60. Nasdaq (^IXIC) futures slipped 0.18% to 2,845.25.

The rally in commodities spurred by the Federal Reserve's announcement of open-ended stimulus might have been overplayed. Copper futures fell in London. Freeport-McMoRan (FCX), the biggest publicly traded copper company, fell 1.03% in pre-market trading. Freeport's share price went from $35.25 on September 5 to over $43 on Friday.

The European Union's trade surplus narrowed from a revised 9.3 billion euros to 7.9 billion euros in July. The surplus was still larger than the average for the second quarter of the year, but most surveys are not pointing to much optimism.

Just as JPMorgan (JPM) shares returned to their pre-London Whale levels, the Office of the Comptroller of the Currency has launched an investigation into possible money laundering at the bank. The regulator says that the bank did not monitor transactions well enough, making it easy for criminal behavior to take place.

AT&T (T) released a press statement which said that the Apple (AAPL) iPhone 5 is the fastest-selling iPhone ever.

Microsoft (MSFT) CEO Steve Ballmer said that the upcoming Surface tablet will be priced at "probably $300 to about $700 or $800." This may or may not sway customers away from the iPad, but Ultrabook makers should take heed of the lower price point for the lightweight computer.

Electronic Arts (EA) is currently in the process of suing Zynga (ZNGA) for intellectual property violations. Late on Friday, Zynga countered with a suit of its own, claiming that EA is in an illegal scheme to prevent Zynga from poaching employees from EA. If these allegations are true, it would run afoul of antitrust laws. EA shares were off more than one percent this morning.

Twitter: @vincent_trivett
No positions in stocks mentioned.

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