Reuters/Brendan McDermid
- US, European, and Asian equities fell on Friday after the Chinese government threatened to suspend trade talks with the US.
- Chinese state media accused the US of playing "petty tricks" and lacking a sincere desire to resolve the trade war.
- "If there is no real concrete action by the United States, it will be meaningless for you to come and talk," the ruling party wrote in its official newspaper.
US, European, and Asian equities slumped on Friday after the Chinese government threatened to cut off trade talks with the US, accusing the nation of using "petty tricks" and lacking a sincere desire to end the trade war.
"If there is no real concrete action by the United States, it will be meaningless for you to come and talk," the Chinese Community Party said in a commentary published by Taoran Notes, a social media account tied to Economic Daily, a state-run newspaper. The comments referred to US Treasury Secretary Steven Mnuchin's intention to travel to Beijing to continue talks. "It is better to suspend the consultation completely and return to the normal working track."
Investors punished US-listed companies that import raw materials and components from China and export finished goods to the Asian nation. For example, some of the biggest fallers in early trading included tractor-maker John Deere, down 4.5%, and microchip-maker Qorvo, down 3.3%. Shares in Dow Chemical, 3M, Apple, and Caterpillar also fell between 1% and 2%.
Markets remain uncertain whether the latest combative rhetoric from the two countries "actually spells the death of any trade deal," said Han Tan, market analyst at FXTM.
Investors are trying to "ascertain whether both sides are playing hardball as an intended signal, a show of brinkmanship, or just plain noise."
The trade war has escalated in the past two weeks, after US President Donald Trump accused the Chinese of sabotaging a prospective deal and hiked tariffs on $200 billion worth of Chinese imports to 25%, spurring China to retaliate with higher duties on $60 billion of US products.
Making matters worse: The White House also imposed sanctions on Chinese telecoms giant Huawei earlier this week. However, it has decided to delay its decision on whether to impose steep tariffs on automobile imports for six months.
"The US does not show any sincerity in continuing talks," the commentary continued, highlighting China's top trade negotiator's visit to Washington last week as a show of the country's sincerity. "Instead, it is extending its pressure tactics. The US on one hand says it engages in talks, but on the other hand keeps using petty tricks to destroy the atmosphere for talks."
The saga is "dampening sentiment again," said Konstantinos Anthis, head of research at ADSS. "Our call for a lack of clear direction in equities in the near term remains valid."
Here's the market roundup as of 2.47 p.m. in London (9.47 a.m. in New York):
- US stocks are dropping. The Dow Jones Industrial Average, S&P 500, and Nasdaq are all down between 0.4% and 0.5%.
- European equities have fallen sharply with Germany's DAX down 0.9%, the Euro Stoxx 50 down 0.6%, and Britain's FTSE 100 down 0.3%.
- Asian indexes closed lower. The Shanghai Composite dropped 2.5%, the SZSE Component slumped a hefty 3.2%, and Hong Kong's Hang Seng slid 1.2%.
- Oil continued its rally with WTI and Brent crude rising 0.7% and 0.1%.
- Bitcoin slumped about 8% to trade around $7,250 after surging past $8,000 earlier this week.