Wall Street extends slide as trade tensions linger
US stocks fell for a third day as an escalation in trade tensions prompted investors to question whether China and America will make progress as talks resume this week. The dollar rose and Treasuries fell.
The S&P 500 swung between gains and losses for much of the day as markets sought a measure of calm after the White House suggested a deal was still possible even as both sides threatened to raise tariffs as soon as Friday. Stocks had swooned 2 per cent to start the week as trade tensions escalated. A late drop in Intel helped to weigh on tech shares.
The S&P 500 Index fell 0.2 per cent lower, while the Nasdaq dropped 0.3 per cent and the Dow Jones Industrial Average added less than 0.1 per cent.
"Volatility in the markets is really headline driven, particularly around the fluid conversations between the US And China," said Charlie Ripley, a senior investment strategist for Allianz Investment Management. "We'll have to see how this thing plays out at the end of the week here, but we would continue to expect this environment as long as the headlines are going back-and-forth."
Beijing's top trade negotiator, Liu He, is traveling to the US on Thursday and Friday for the high-stakes talks. US officials have said Chinese negotiators reneged in the past week on provisions in a draft deal the US considered settled. The developments raise the prospect that talks between the US and China to resolve their trade war could collapse entirely.
An escalation of Trump's rhetoric on trade in the past few days appears to have caught global equity markets off-guard. Many had been testing record highs, seemingly priced to perfection on the assumption a deal between the US and China would get done. The likes of JPMorgan boss Jamie Dimon still put the odds of that at 80 per cent, and the S&P 500 has only fallen to levels seen a month ago.
Elsewhere, the yuan edged lower as data showed Chinese exports unexpectedly fell in April and imports rose. The New Zealand dollar slumped more than 1 per cent as the central bank cut interest rates, though it later pared most of the drop.
In emerging markets, the lira extended losses against the dollar amid the fallout from Turkey's decision to re-run municipal elections in Istanbul. The South African rand strengthened as the country headed to the polls for a national election.
Bloomberg