Markets mixed, US “not ready” for deal with China, Italy at risk of “doom loop”

Markets were mixed on Tuesday.

The S&P 500 fell 0.8 percent and the STOXX Europe 600 fell 0.2 percent but the Nikkei 225 rose 0.4 percent.

The US-China trade tension continued to be a concern after President Donald Trump said at a news conference in Tokyo on Monday that the US is “not ready to make a deal”, adding that, instead, tariffs on Chinese products could go up “very substantially”.

In Europe, sentiment was affected by a statement by Italian Deputy Prime Minister Matteo Salvini that the European Commission could slap a 3 billion euro fine on the country for breaking EU rules due to its rising debt and structural deficit levels.

“For Italy, the potential for a doom loop is still looming in the background where you have an undesirable connection between the debt possession of the state and the banks,” said Teeuwe Mevissen, senior eurozone market economist at Rabobank.