Market Snapshot: Dow futures turn lower after Trump says China deal may be best after 2020 election

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Stock-index futures pointed to a lower start for Wall Street on Tuesday, after President Donald Trump said the idea of holding off on a U.S.-China trade deal until after the 2020 presidential election had appeal.

What are major indexes doing?

Futures on the Dow Jones Industrial Average YMZ19, -0.30%  were down 86 points, or 0.3%, at 27,702, while S&P 500 futures ESZ19, -0.23%  gave up 7.7 points, or 0.3%, to trade at 3,106.50. Nasdaq-100 futures NQZ19, -0.31%  were off 25 points, or 0.3%, at 8,291.

Stocks saw their biggest one-day decline in nearly eight weeks on Monday, with the Dow DJIA, -0.96% falling 268.37 points, or 1%, to end at 27,783.04. The S&P 500 SPX, -0.86% dropped 27.11 points or 0.9%, to close at 3,113.87, while the Nasdaq Composite COMP, -1.12%  finished at 8,567.99, with a loss of 97.48 points or 1.1%.

What’s driving the market?

Index futures gave up early gains after Trump, speaking at a London news conference, said he had “no deadline” when it comes to concluding the long-running U.S.-China trade talks.

“In some ways, I think it’s better to wait until after the election if you want to know the truth. But I’m not going to say that, I just think that,” Trump said.

While Trump has made similar comments in the past, analysts said stocks remain highly sensitive to headlines and comments on the trade talks, with optimism over the prospect for a so-called phase one deal running high since early October.

Read: Was Trump talk bluster or was he hinting that China talks could collapse?

“The run higher seen in major benchmarks in the past few months has been built in no small part on questionable foundations with near incessant positive noises on the U.S.-China trade front seemingly the major catalyst,” said David Cheetham, chief market analyst at XTB Limited, in a note.

See: Don’t get so excited, this economist says — the trade news isn’t that good

Major stock indexes rallied to a series of record highs in November, but investors and analysts have warned that markets could be in for a rougher ride if concrete progress isn’t seen ahead of a Dec. 15 deadline for another round of U.S. tariffs on Chinese imports.

“Markets simply aren’t priced for this; for a trade deal to be that far in the future — if one can even be struck at all. After weeks of making generally positive noises on a deal being very close, there is a real sense now that a deal is not so very near at all and markets need to reprice,” said Neil Wilson, chief market analyst for Markets.com, in a note.

Also read: Stock-market volatility finally ‘springs to life’ after weak factory data

Combined with tariff threats on the European Union, Trump’s comments could be taken as a sign the White House has no qualms about levying further tariffs “and is happy using trade as a economic, political and diplomatic weapon,” Wilson said.

Stocks were pressured Monday following a weaker-than-expected reading on the Institute for Supply Management’s November manufacturing index. Weakness was also tied to Trump’s decision to reimpose tariffs on imports of steel and aluminum from Brazil and Argentina after he accused the two countries of manipulating their currencies at the expense of U.S. exporters.

The Trump administration is proposing tariffs on up to $2.4 billion of French imports in retaliation for France’s tax on U.S. tech giants. France’s finance minister threatened a “strong European riposte” if the U.S. follows through with the tariff threat.

The U.S. is also preparing tariffs on $7.5 billion of European Union imports over illegal subsidies for European aircraft giant Airbus, following a World Trade Organization ruling that gave the U.S. a green light to impose the duties. The WTO ruled the EU hadn’t complied with an order to end the subsidies.

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