Global Stocks Drop After Trump Signals Further Delays to China Deal
By Anna Isaac
Global stocks fell Tuesday after President Trump signaled that
he may wait another year to strike a deal with China, prompting
concerns that a long-awaited end to the trade war may be further
Futures linked to the Dow Jones Industrial Average declined
0.6%, reversing gains posted earlier in the day. The
pan-continental Stoxx Europe 600 gauge wavered between gains and
losses before slipping down 0.1%.
Mr. Trump said he has "no deadline" for reaching a trade accord
"In some ways, I like the idea of waiting until after the
election for the China deal," the president said, following a
meeting with the North Atlantic Treaty Organization
Secretary-General Jens Stoltenberg on Tuesday in London. The U.S.
presidential elections are scheduled for Nov. 3.
The dispute between the world's two biggest economies, which has
curtailed global trade as both sides imposed tariffs and threatened
new levies, has weighed on the outlook for economic growth around
the world. An agreement with China is dependent on whether he wants
to make one, Mr. Trump said.
"It's extremely difficult to base any investment thesis around
trade, given how challenging the protagonists are," said Colin
Reedie, co-head of global fixed income at Legal & General
Investment Management. "It's been a fairly bullish risk
environment, and markets are squeezing higher toward the end of the
year, so they are a little bit more vulnerable to bad news."
The U.S. on Monday moved toward opening multiple new fronts in
Mr. Trump's global trade war.
The White House proposed tariffs against $2.4 billion of French
imports in response to the European nation's new digital-services
tax, which it said unfairly targets U.S. tech companies such as
Apple and Alphabet's Google. France's Finance Minister Bruno Le
Maire said the European Union "would be ready to retaliate" if the
U.S. pressed ahead and imposed tariffs.
"Tariffs will be a part of statecraft from now on," said
Geoffrey Yu, head of the U.K. investment office at the
wealth-management arm of UBS Group. "There are no allies when it
comes to tariffs right now."
The threat to impose levies on French products came within hours
of Mr. Trump saying he would revive tariffs on steel and aluminum
imports from Brazil and Argentina, a move that caught investors
off-guard on Monday and weighed on U.S. stocks.
Yields on U.S. and European government bonds dropped as
investors shifted funds into haven assets. The rate on the 10-year
Treasurys fell to 1.795%, from 1.835% Monday.
"The move lower in bond yields is utterly in response to the
rhetoric of Trump himself," said Mr. Reedie.
Earlier in the day, trading across Asia was mixed. The Shanghai
Composite Index ended the day up 0.3% while Japan's Nikkei 225
gauge fell 0.6% before Mr. Trump made his comments on the China
Brent crude, the global benchmark for oil prices, gave up
earlier gains and traded almost flat at $60.85 a barrel.
Later in the day, software maker Salesforce.com will report
earnings after markets close in the U.S.
Write to Anna Isaac at email@example.com
(END) Dow Jones Newswires
December 03, 2019 08:19 ET (13:19 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.