U.S. index behavior is in the red again today, after markets closed down yesterday.
Edging off of their six-month highs, S&P 500 and DJIA moves continue to show investor uncertainty in the face of the US/China trade war, which has been moving markets here and there since the American president’s sudden opening of the trade conflict early this month.
Yesterday, as we reported, markets were up based on the potential for closing some of this sordid chapter of Sino-U.S. relations by easing restrictions on Chinese telecom giant Huawei.
Today we see a return to the very real concerns over bringing US/China trade conflict to a swift resolution.
“Markets closed in the red on Tuesday in absence of visible catalysts to boost equities,” write Zacks analysts in a piece updated for market analysis this morning. “Meanwhile, market-watchers also closely followed the latest developments on the U.S.-China trade war front. President Trump stated at a press conference in Tokyo that America was not ready to make a trade deal with China. The three major benchmarks gave up earlier gains to end in the negative territory.”
The unnamed authors further reported that Trump has said tariffs on Chinese products could be in applied additional increases “very easily.”
“(Trump) said the companies were leaving the shores of China to countries that have no tariffs, the likes of which included the United States as well as Asian superpowers like Japan,” they wrote. “Despite such comments, Trump seemed optimistic about a trade deal with China ‘sometime in the future.’ Meanwhile, a report published in China’s state-run newspaper Xinhua stated that the United States was ‘scapegoating’ China for its economic woes. Further, the news agency also called for a unified stance against ‘foreign pressure.’”
We’ve seen how these big narratives around US/China trade repeatedly sinks smaller bits of economic news, for example, the merger of Fiat Chrysler with Renault, or positive United States economic numbers.
Part of the reason that the trade conflict is such a major presence in market analysis and such an ominous threat is the size of both economic markets, but there’s also the reality that the Chinese hold massive amounts of U.S. treasury notes.
These big ideas contoured by analysts in this week’s press will play out through the rest of the week as markets are likely to remain jittery.