Stocks rattle as Trump says ‘no trade deal deadline with China’
Traders work on the floor of New York Stock Exchange on Tuesday. Reuters
Trump, in Britain for a NATO summit, warned that efforts to resolve a trade dispute could wait until after next November’s US election.
“I have no deadline,” Trump told reporters upon his arrival.
“In some ways I like the idea of waiting until after the election for the China deal.” Trump’s trade war with China and on-again off-again attempts to reach a deal have destabilised markets and stoked geopolitical tensions.
“The chances of a deal by December 15 just took another turn lower,” said Markets.com analyst Neil Wilson.
“After weeks of making generally positive noises on a deal being very close, there is a real sense now that a deal is not so very near at all and markets need to reprice,” Wilson added.
As recently as last week Trump boasted that he was in the “final throes” of negotiating “one of the most important deals in trade ever”.
But Washington has since courted Chinese anger by expressing support for Hong Kong protesters.
Optimism that Beijing and Washington will eventually hammer out a partial agreement as part of a wider deal had supported equities for weeks, helping Wall Street to set numerous records.
But investor sentiment was dealt a blow on Monday when Trump said he would reinstate tariffs on steel and aluminium from Argentina and Brazil whom he accused of manipulating their currencies and hurting US farmers.
Later, officials warned they would also hit France with up to 100 per cent levies on $2.4 billion in goods, saying a French digital tax was discriminatory against US tech firms such as Google, Apple and Amazon.
US President Donald Trump said on Tuesday there might be substantial taxes on French goods if the United States and France failed to find an agreement in a trade dispute over France’s plans for a digital tax.
“We’ve taxed wine and we have other taxes scheduled. We’d rather not do that, but that’s the way it would work. So it’s either going to work out, or we’ll work out some mutually beneficial tax,” Trump told reporters, sitting alongside French President Emmanuel Macron in London ahead of a NATO summit, referring to measures already announced on Monday.
He added: “The tax will be substantial, and I’m not sure it’s going to come to that but it might.”
On Tuesday, France vowed a “strong” response to any tariffs. French President Emmanuel Macron said on Tuesday he was hopeful that trade and economic disagreements with the United States, including a dispute over France’s new digital services tax, could be settled.
“I think we can settle this situation with President Trump. I am rather confident we can have a discussion together about it,” Macron told a news conference at a NATO alliance summit.
Macron stressed, however, that he was “determined to defend the interests of our country and of Europe”.
Wall Street sank more than 1% and the benchmark S&P 500 hit a near one-month low on Tuesday as comments from President Donald Trump stoked fears of a significant delay in resolving a bruising trade dispute with China.
Nine of the 11 major S&P 500 sectors were trading lower, with tech heavyweights Apple Inc, Microsoft Corp and Amazon.com Inc weighing the most.
The trade-sensitive Philadelphia Semiconductor index dropped 2.2% to an over one-month low.
Tuesday’s declines have pulled the main US stock indexes firmly away from record highs hit last month on hopes that the world’s top two economies will hammer out a “phase one” trade deal soon.
At 10:00 am the Dow Jones Industrial Average was down 364.25 points, or 1.31%, at 27,418.79, the S&P 500 was down 34.65 points, or 1.11%, at 3,079.22 and the Nasdaq Composite was down 99.85 points, or 1.17%, at 8,468.14.
The CBOE Volatility index hit its highest since Oct. 10.
In corporate news, shares of Audentes Therapeutics Inc more than doubled in value after Japan’s Astellas Pharma Inc said it would buy the US drugmaker for about $3 billion in cash.
AK Steel Holding Corp rose 4% after miner Cleveland Cliffs Inc agreed to buy the steel maker for about $1.1 billion in an all-stock deal. Shares of Cleveland-Cliffs slumped 13.4%.
Declining issues outnumbered advancers for a 3.57-to-1 ratio on the NYSE and for a 2.96-to-1 ratio on the Nasdaq.
Among industrial sectors, London-listed mining companies retreated on worries over demand from Asian powerhouse China, which is a top consumer of many commodities.
Agencies
