[ad_1]
A strong sale will start the week on Wall Street after President Donald Trump announced Sunday that the United States would increase tariffs on products imported from China, questioning the recent optimism that the two largest Global economies were about to solve their trading problems battle.
The futures of the Dow Jones Industrial Average imply an initial decline of more than 500 points Sunday night in the United States. The futures on the S & P 500 and Nasdaq-100 indices also showed declines for both indexes at Monday's opening.
Oil prices also fell sharply in the morning trading hours in Asia as US crude futures dropped 2.83% to $ 60.19 a barrel. Brent futures in the international market also fell 2.48% to $ 69.09 per barrel.
Trump said in a tweet Sunday afternoon that current draws of 10% to $ 200 billion of Chinese products would increase to 25% Friday. He also threatened to impose tariffs of 25% on 325 billion additional dollars of Chinese products "soon".
Although trade talks between Washington and Beijing officials are about to resume on Wednesday, the president lamented that progress is proceeding "too slowly" as China tries to renegotiate the terms of the talks. agreement.
The Wall Street Journal announced that China was considering canceling its trade talks with the United States this week in light of Trump's latest threats. Citing a source, the newspaper said Beijing was surprised by the new threats.
Two informed sources of the discussions confirmed this news to CNBC. The Chinese could give up talks this week after Trump's rising tariff threat, they said, giving up a six-month truce after Beijing embarrassed itself over some previously discussed commitments.
A source said Chinese Vice Premier Liu Il will likely cancel the planned trip for himself and a 100-strong delegation for a final round of talks that US officials say could lead to an agreement. by Friday. The Chinese authorities canceled a trip in late September 2018 under similar circumstances.
A second source said Trump's decision to double the 200-billion-dollar customs duty rate was supposed to send Liu the message of not coming to the US with more "empty offers" .
The White House, US Treasury and US Trade Representative office did not immediately respond to CNBC's requests for comment.
The apparent reversal of commercial sentiment has left some Wall Street insiders worried about the effect on the US stock market of unprecedented new highs.
"Another tighter turn on Sunday with the president's brutal tactics in trade talks with China, and his two tweets seem to be triggering a sharp stock market correction," said Chris Rupkey, chief economist at the MUFG Union Bank, in a note. "For weeks, markets have been lulled by the trade war between the United States and China, thinking that an agreement was imminent – no more."
"This has all the qualities of a complete disaster that could cause the stock market to break this week and send these external risks to the booming US economic outlook," he added.
Shares of US companies making big sales in China could lead Monday market losses, including Apple, Wynn Resorts and various chip manufacturers, fearing retaliation from China.
Global sales representatives Caterpillar and Boeing could also be under pressure.
The S & P 500, up 17.5% in 2019 alone, broke a record Tuesday. The Nasdaq Composite, which has experienced strong technological growth, climbed more than 20% this year and closed a record Friday.
As the negotiations neared completion and tackled thorny issues, including intellectual property rights, Trump may be hoping to use the strength of the US economy and markets to his advantage.
US markets posted substantial gains Friday after the Labor Ministry said the US economy created 263,000 jobs in April, with the Nasdaq posting its best day in seven weeks, breaking a new record. The Russell 2000 outperformed and posted its best day since January, while the S & P 500 had its best day of the month.
Despite the new enthusiasm, hoping to take advantage of the relative health of the US stock market and the economy as a whole in the hope of reaching a better deal in the future could leave one wondering how long Wall Street will have to wait a permanent solution.
Trade officials "continued to say that an agreement was imminent, so the market could be disappointed in the near term," said Bruce McCain, chief investment strategist at Key Private Bank. "I think some contracts have been profitable to a certain extent … the market is baked in a lot of positives."
Mr McCain said that, even though an economic recession still seemed unlikely, he was in agreement with Rupkey's expectations regarding a sell-off and that he would not be surprised to see a drop in oil prices. 5% to 10% if trade negotiations failed.
The president's announcement also appears to contradict new proposals by Treasury Secretary Steven Mnuchin and White House chief of staff Mick Mulvaney. Asked Tuesday on Mnuchin's earlier suggestion that the White House could announce an agreement with Beijing in the next two weeks, Mulvaney responded, "I think it's right."
Mnuchin and Mulvaney's positive outlook – as well as optimistic comments by Trump's director of the National Economic Council, Larry Kudlow – have often encountered contradictions from trade officials, such as US Trade Representative Robert Lighthizer.
Lighthizer, known for his warmongering economic views towards China, urged Trump not to remove taxes on Beijing products until it shows that it meets the terms of the # 39; agreement.
"Bob Lighthizer has Trump's ear, not so much Mnuchin and Kudlow in the final days of the trade negotiations," said Larry McDonald, editor of The Bear Traps Report. "The hardball game book is hitting again."
– Kayla Tausche of CNBC contributed to this report.
[ad_2]
Source link