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By Shreyashi Sanyal
(Reuters) – US index futures tumbled on Friday, as President Trump's trade war, which was so scary to global growth, crystallized in Broadcom chips maker's slack sales forecast and the signs of the worst slowdown in Chinese industry for 17 years.
Shares of Broadcom Inc plummeted 9.8% in pre-market trading, after cutting $ 201 billion in revenue forecast for 2019, due to US-China trade dispute and restrictions to the export imposed on Huawei Technologies Co Ltd.
Data from China showed that industrial growth in the world's second-largest economy slowed to its lowest level in more than 17 years in May, dampening equity investors around the world.
The Nasdaq 100 e-minis posted a 59.5-point drop of 0.79% at the opening, while Dow e-minis slipped 52 points, or 0.2%, and the S & P 500 e-minis of 8.75 points, or 0.3%.
The S & P has gained about 5% in June so far, in the hope that the Federal Reserve will soon reduce its interest rates to combat slowing global growth, a stark contrast with the monetary tightening followed until the end of last year.
The Broadcom news was one of the clearest indications to date of the trade-sensitive technology sector of the magnitude of the pain that companies can expect from Washington's confrontation with China.
Semiconductor stocks, which both generate revenue and sell heavily in China, have plummeted, with Intel Corp., Advanced Micro Devices Inc. and Micron Technology Inc. falling between 2.2% and 4%. Apple Inc. shares also declined 1.2%.
A Fed meeting next week may well test market expectations that the US central bank could cut rates up to three times this year, while a Group summit a 20 at the end of the month could still generate more progress in a trade deal.
China on Friday announced the lifting of anti-dumping duties on certain seamless alloy steel pipes and tubes from the United States and the European Union up to ten times.
On the macroeconomic front, the Commerce Department's retail sales report for May is expected to rise 0.6% at 8:30 am ET after a 0.2% drop in April.
(Report by Shreyashi Sanyal and Aparajita Saxena in Bengaluru, edited by Patrick Graham)
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