AP
- European equities and US futures fell Wednesday as investors worried about the trade war.
- Asian stocks rallied, however, on renewed potential for a trade deal and Chinese government stimulus.
- President Donald Trump on Tuesday said a trade deal “could absolutely happen,” while Beijing might pump money into the economy to combat slowing growth of retail sales and industrial production.
European equities and US futures fell Wednesday as investors worried about the US-China trade war. Asian stocks rallied, however, on renewed hopes for a trade deal and the prospect of further Chinese government stimulus.
President Donald Trump told reporters on Tuesday that the trade war was a “little squabble” and that a deal “could absolutely happen,” according to CNN. The president’s positive rhetoric came after he accused China of sabotaging a draft trade deal and hiked tariffs on $200 billion worth of Chinese goods last week, leading China to retaliate with plans to raise duties on $60 billion worth of US products.
Disappointing domestic data could prompt the Chinese government to inject more money into the economy. Retail sales rose 7.2% in April, undershooting forecasts and growing at their slowest rate in 15 years, according to Reuters, citing official government figures. The decrease may worry investors in fashion stocks, which were sold off this week on fears of higher import and export costs and weaker Chinese demand.
Chinese industrial production rose 5.4% in April, a sharp pullback from 8.5% growth in March, which was its fastest increase in more than four months, according to Reuters.
“These figures show that the Chinese economy is losing steam,” said Jasper Lawler, the head of research at London Capital Group.
Following the president’s reassurances, markets are “behaving a little more sensibly,” said Neil Wilson, the chief market analyst for Markets.com.
“The problem right now is that this market is trading on the whimsy of Donald Trump all the time, which makes it a tough place to be,” Wilson added. “One can only say that we should expect more volatility ahead and more shaking of the tree from Donald Trump.”
Here’s the market roundup as of 10:10 a.m. in London (5:10 a.m. ET):
- European equities opened lower, with the Euro Stoxx 50 down 0.3%, France’s CAC 40 down 0.3%, and Germany’s DAX down 0.2%. Britain’s FTSE 100 inched up 0.2%.
- US stocks were set to open marginally lower. Futures underlying the Dow Jones Industrial Average and the S&P 500 were down less than 0.1%, while Nasdaq futures were almost flat.
- Asian indexes closed higher, with China’s Shanghai Composite up 1.9%, Japan’s Nikkei up 0.6%, and Hong Kong’s Hang Seng up 0.5%.