- Reuters/Brendan McDermid
- US futures and European and Asian equities fell on Friday after the Chinese government threatened to suspend trade talks with the US.
- Chinese state media accused the US of playing “petty tricks” and lacking a sincere desire to resolve the trade war.
- “If there is no real concrete action by the United States, it will be meaningless for you to come and talk,” the ruling party wrote in its official newspaper.
US futures are following European and Asian equities lower on Friday after the Chinese government threatened to cut off trade talks with the US, accusing the nation of using “petty tricks” and lacking a sincere desire to end the trade war.
“If there is no real concrete action by the United States, it will be meaningless for you to come and talk,” the ruling party wrote in its official newspaper, referring to US Treasury Secretary Steven Mnuchin’s intention to travel to Beijing to continue talks. “It is better to suspend the consultation completely and return to the normal working track.”
Markets remain uncertain whether the latest combative rhetoric from the two countries “actually spells the death of any trade deal,” said Han Tan, market analyst at FXTM.
Investors are trying to “ascertain whether both sides are playing hardball as an intended signal, a show of brinkmanship, or just plain noise.”
The trade war has escalated in the past two weeks, after US President Donald Trump accused the Chinese of sabotaging a prospective deal and hiked tariffs on $200 billion worth of Chinese imports to 25%, spurring China to retaliate with higher duties on $60 billion of US products.
Making matters worse: The White House also imposed sanctions on Chinese telecoms giant Huawei earlier this week.
“The US does not show any sincerity in continuing talks,” the commentary continued, highlighting its top trade negotiator’s visit to Washington to last week as a show of its sincerity. “Instead, it is extending its pressure tactics. The US on one hand says it engages in talks, but on the other hand keeps using petty tricks to destroy the atmosphere for talks.”
The saga is “dampening sentiment again,” said Konstantinos Anthis, head of research at ADSS. “Our call for a lack of clear direction in equities in the near term remains valid.”
Here’s the market roundup as of 10.55 a.m. in London (5.55 a.m. in New York):
- US stocks are set to drop. The futures underlying the Dow Jones Industrial Average, S&P 500, and Nasdaq were all down between 0.3% and 0.5%.
- European equities have dropped sharply with Germany’s DAX down 0.6%, the Euro Stoxx 50 down 0.4%, and Britain’s FTSE 100 down 0.2%.
- Asian indexes closed lower. The Shanghai Composite dropped 2.5%, the SZSE Component slumped a hefty 3.2%, and Hong Kong’s Hang Seng slid 1.2%.
- Oil continued its rally with WTI and Brent crude rising 0.8% and 0.5%.