- Global stocks and US futures fell after US President Donald Trump accused China of scuppering the two nations’ trade talks.
- The news fanned fears that his threatened tariff increases on $200 billion of Chinese goods will kick in on Friday.
- "China broke the deal," Trump said at a rally on Wednesday night.
- "If the two sides increase the tariffs … growth on a global scale will take a hit," said one analyst.
Stocks in Asia, Europe and futures in the US are slumping on Thursday after US President Donald Trump accused China of scuppering the two nations’ trade talks, fanning traders’ fears that his threatened tariff increases on Chinese goods will be implemented on Friday.
"China broke the deal," Trump said at a rally on Wednesday night, doubling down on the White House’s assertion that Chinese officials reneged on agreed provisions in a draft trade agreement. He only plans to meet Liu He, China’s top trade negotiator who has traveled to Washington for talks this week, if the two sides make progress, according to Bloomberg.
"These comments clearly don’t bode well for the trade talks which are due to start today," said Jasper Lawler, head of research at London Capital Group. He pegs the odds of the tariff hike — from 10% to 25% on $200 billion of Chinese goods — being introduced at 75%.
Investors are bracing for a broader downturn if the tariffs are passed.
"The markets are nervous of the impact that these actions will have on the health of the global economy, just as it is showing tentative signs of stabilizing following a period of slower growth," Lawler said. "Should Trump go ahead with the tariff increase, we could expect equities to continue falling."
The tariff increases would have a sudden and significant impact on China’s growth, undermining policymakers’ recent efforts to spur a recovery. The world’s second-largest economy has threatened to retaliate with "necessary countermeasures" if the US hikes tariffs, raising the prospect of a significant escalation in their trade war.
"If the two sides increase the tariffs on each other’s imports, growth on a global scale will take a hit," said Konstantinos Anthis, head of research at ADSS.
Here’s the market roundup as of 4.40 a.m. (9.40 a.m. ET):
- US stocks are poised to open lower, with the futures underlying the Dow, S&P, and Nasdaq down between 0.8% and 1%.
- Asian indexes closed lower. The Shanghai Composite slid 1.5%, the China A50 slumped 2.1%, and Hong Kong’s Hang Seng dropped 2.3%.
- European equities were sliding with Germany’s DAX down 0.8%, Britain’s FTSE 100 retreating 0.4%, and the Euro Stoxx 50 dropping 1.2%.
- Oil futures have fallen with WTI crude down 0.7% and Brent crude down 0.6%.
- The stock-investing chief overseeing $235 billion at Charles Schwab breaks down his surprisingly bullish call on the market’s least favorite sector
- 2 of Wall Street’s biggest firms are at odds over the stock market’s next move — and their clash should be a wake-up call for bulls everywhere
- Bank of America has devised the perfect trading strategy to profit from an imminent melt-up in stocks — one it says will win even if the market plunges