Futures retreat as U.S.-China tensions heat up over TikTok

By Sagarika Jaisinghani and Medha Singh

(Reuters) – U.S. stock futures pulled back on Tuesday as President Donald Trump’s moves to force China-owned TikTok into a sale of its U.S. operations drew a sharp rebuke from Beijing, ratcheting up tensions as the world slides into a pandemic-fuelled recession.

Friction between the world’s top two economies took a back seat in the first half of 2020 as the COVID-19 pandemic crushed global growth, and an escalation now would hamper the recovery of some exporters and importers and fan fears of a deeper economic slump.

With Microsoft Corp looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price. On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company.

The S&P 500 closed Monday within 3% of its all-time high, powered over the past four months by a stimulus-led rebound and a rally in tech-related stocks including Apple Inc , Netflix Inc and Amazon.com Inc .

At 7:02 a.m. ET, Dow e-minis <1YMcv1> were down 13 points, or 0.05%, S&P 500 e-minis were down 6.25 points, or 0.19% and Nasdaq 100 e-minis were down 22 points, or 0.2%.

Investors are now awaiting signs of progress in a fifth major coronavirus-aid bill with Congress set to resume talks on Tuesday to narrow gaping differences.

In earnings-related news, insurer American International Group Inc fell 2.8% in premarket trading after posting a 56% fall in quarterly adjusted earnings.

Take-Two Interactive Software Inc rose 4.7% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”.

Rival Activision Blizzard Inc gained 3.8% ahead of its results due after the closing bell.

Walt Disney Co , Fox Corp and Wynn Resorts Ltd are also expected to report quarterly results later in the day.

(Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; editing by Uttaresh.V)