Friday, 10 May 2019

Markets fall amid concerns of “disastrous outcome” of US-China trade talks

Markets fell on Thursday.

The S&P 500 fell 0.3 percent, the STOXX Europe 600 plunged 1.7 percent, the Nikkei 225 fell 0.9 percent and the Shanghai Composite tumbled 1.5 percent.

The trade tension between the US and China continued to weigh on markets after US President Donald Trump claimed on Wednesday that China “broke the deal”.

Chris Rupkey, managing director and chief financial economist at global financial group MUFG, warned that an increase in US tariffs on China imports “spells disaster for the U.S. economy”.

Edward Moya, senior market analyst at Oanda, said that “a disastrous outcome this week...could see a 10% correction with U.S. equities” while a “framework agreement is likely to see stocks attempt another run at making fresh record highs”.

Moya said that “the base case remains for a deal to be reached”.

Still, David de Garis, a director and senior economist at National Australia Bank, wrote in a note that the negotiation “could easily go pear-shaped again”.

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