The US Department of Justice has Alphabet (Googl: Nasdaq) in its sights. The European Union has levied over $9.0 billion in fines against the company for the audacity of favouring its products over those of its competitors. The DoJ seems to want a piece of the action and is reportedly preparing its own probe. That was not music to investors’ ears and GOOGL is down 6.43% in early trading.
Amazon (AMZN: Nasdaq) is also facing scrutiny from the Federal government. The Washington Post reported that the Federal Trade Commission may be looking into Amazon. Last week, the Canadian government pondered finding Facebook’s Mark Zuckerberg and Sheryl Sandberg in contempt of parliament because they blew off a subpoena to testify in Ottawa.
Wall Street opened in positive territory but couldn’t hold on to the gains. The three major indices are falling led by a 0.95% drop in the Nasdaq as of 14:04 GMT. US/China trade tensions are another concern. China’s State Council Information Office’s White Paper on China-US Economic and Trade Consultations is weighing on trading sentiment. China blames the US for backtracking on its commitments. They also say that “China’s technological innovation is based on self-reliance. Accusing China of intellectual property theft and forced technology transfer is utterly unfounded.”
President Trump fanned the trade tension flames with a tweet upon arriving in the UK. He said “China is subsidising its product in order that it can continue to be sold in the USA. Many firms are leaving China for other countries, including the United States, in order to avoid paying the Tariffs. No visible increase in costs or inflation, but U.S. is taking Billions!”
Earlier, he took a shot at London’s Lord Mayor Sadiq Khan, tweeting “@SadiqKhan, who by all accounts has done a terrible job as Mayor of London, has been foolishly “nasty” to the visiting President of the United States, by far the most important ally of the United Kingdom. He is a stone cold loser who should focus on crime in London, not me.....Kahn reminds me very much of our very dumb and incompetent Mayor of NYC, de Blasio, who has also done a terrible job - only half his height. In any event, I look forward to being a great friend to the United Kingdom, and am looking very much forward to my visit. Landing now!” The Brits dismissed this tweet as just the deranged ramblings of an ill-mannered buffoon from the colonies.
The US dollar has edged lower in New York trading, in part due to a slightly weaker than expected ISM Manufacturing PMI report for May (Actual 52.1 vs forecast 53.0) and soft Construction Spending for April. USDJPY is the underperformer as soft Treasury yields weigh on prices.