Global stocks react to concerns over US-China trade deal

Wall Street bounced back Wednesday on investor optimism for an interim trade deal with China.
On Wall Street, futures for the Standard & Poor's 500 index and Dow Jones Industrial Average were 0.5 per cent higher.
On Wall Street, futures for the Standard & Poor's 500 index and Dow Jones Industrial Average were 0.5 per cent higher.PHOTO: REUTERS

Trump's remarks that he has no deadline for trade deal cause Asian bourses to close lower

BEIJING • Global stock markets were mixed yesterday after United States President Donald Trump cast doubt over the potential for a trade deal with China this year.

Equity benchmarks across Asia including Singapore closed lower, with Australia and Hong Kong bearing the brunt of the declines.

However, sentiment improved during European trading hours, following Mr Trump's fresh comments at a meeting of Nato leaders near London that discussions are going well. In the US, Wall Street futures pushed higher along with European stocks.

This came after heated rhetoric on Tuesday, when Mr Trump said he has "no deadline" for a trade deal and does not mind waiting until after next year's presidential election to make one. Investors had hoped for at least enough progress to stave off new US tariffs on Chinese goods, including smartphones and laptops, scheduled to start Dec 15.

Tensions flared last week after Mr Trump signed legislation expressing US support for pro-democracy demonstrators in Hong Kong.

"Until both sides dial down their hawkish rhetoric, markets will continue to pull back earlier optimism," said DBS Group analysts in a report. "Trade war will be the key driver of sentiment in the immediate few weeks."

In Europe, gains were seen in early trading yesterday. London's FTSE 100 was up 0.3 per cent, while Germany's DAX gained 0.4 per cent and France's CAC 40 advanced 0.5 per cent.

On Wall Street, futures for the Standard & Poor's 500 index and Dow Jones Industrial Average were 0.5 per cent higher. This follows losses on Tuesday when the benchmark S&P 500 fell 0.7 per cent and the Dow lost 1 per cent. The Nasdaq dropped 0.6 per cent.

Earlier yesterday, Singapore stocks closed lower, with the benchmark Straits Times Index down 0.42 per cent. A total of 1.07 billion shares changed hands with a turnover of $1.37 billion. Losers outnumbered gainers by 224 to 134.

TRADE WAR WEIGHS ON MARKETS

Until both sides dial down their hawkish rhetoric, markets will continue to pull back earlier optimism... Trade war will be the key driver of sentiment in the immediate few weeks.

DBS GROUP ANALYSTS

A similar story unfolded for the rest of Asia yesterday, with Tokyo's Nikkei 225 index sinking 1.1 per cent and Hong Kong's Hang Seng giving up 1.3 per cent.

The Shanghai Composite Index retreated 0.2 per cent and Seoul's Kospi declined 0.7 per cent.

Meanwhile, Australia's S&P-ASX 200 fell 1.6 per cent and benchmarks in Taiwan, New Zealand and other parts of South-east Asia also retreated.

Negotiators have yet to agree on details of an interim deal Mr Trump has called Phase 1. Investors also are weighing the potential for additional trade disputes.

On Tuesday, Mr Trump proposed tariffs on US$2.4 billion (S$3.27 billion) in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat on Monday to raise tariffs on steel and aluminium from Argentina and Brazil.

ASSOCIATED PRESS, REUTERS

A version of this article appeared in the print edition of The Straits Times on December 05, 2019, with the headline 'Global stocks react to concerns over US-China trade deal'. Print Edition | Subscribe