U.S. market indexes initially opened sharply lower on Monday after the APEC summit in Papua New Guinea failed to issue a communiqué for the first time in the summit’s 29-year history.
The ongoing trade spat between Washington and Beijing dominated the tense summit, washing away hopes for an amicable solution.
Reports say that before the summit, U.S. and Chinese leaders disagreed on their definitions of fair and free trade, including how to categorize and regulate the activities of state-owned companies when they invest in other nations. Vice President Mike Pence took Wall Street by surprise during the meeting when after he said that the U.S. would only end its tariffs on $250 billion of Chinese imports when the Asian giant revises its trading policies.
Trump administration views Chinese state-owned enterprises (SOEs) as a ‘grand strategy’ of President Xi Jinping’s government. The administration has also accused China of protecting its domestic companies at the expense of US firm and blasted the Xi Jinping for using the Belt and Road Initiative as a way of trapping other countries into debt. Beijing continues to dismiss the accusations with a majority of its citizens believing that the U.S. is actively attempting to control it from amassing more power by reining in on its economic growth.
Investors keenly watched as emotions ran high between leaders of the two nations at the summit. U.S. stocks bounced back around the time stock markets opened in Europe, despite the awkward summit that showed the ongoing dispute isn’t likely to end any time soon.
US futures edged higher last week after China delivered a list of measures to the U.S., aimed at bringing an end to the trade disagreement. President Trump even went ahead to say that he may not consider additional tariffs on Chinese products.
Ray Attrill, head of foreign-exchange strategy at National Australia Bank Ltd said, “The comments from Trump were seen as offering a glimmer of hope that further tariff action could be held in abeyance. The exchange of barbs between Pence and Chinese President Xi Jinping in PNG on the weekend continues to suggest this is unlikely.”
Meanwhile, a report by The Wall Street Journal saying that Apple lowered its iPhone production, also weighed on the Nasdaq futures early Monday. The report cited sources that said orders for all three of the iPhone models that unveiled in September was lower down than anticipated. Shares of the iPhone maker were down 3.08% in the first hour of regular trade.
