Investors calmer as dust settles on US/China setback
It won’t come as a surprise to anyone to learn that attention is primarily on US/China trade talks again on Tuesday, after the prospect of a deal on Friday quickly turned into the threat of new tariffs.
Trump sent investors into a tizzy after sending out a tweet claiming the White House is preparing to slap new tariffs on China on Friday as a result of slow progress in negotiations.
This may all just be last minute wrangling as both sides dot the I’s and cross the t’s and look to gain final concessions but investors are nonetheless quite wary about the possibility of talks collapsing so late in the day. A deal was pretty much priced in, with the rhetoric of recent months very much being focused around the timing of a deal rather than the prospect of one but that has suddenly changed.
The initial response to the latest development was understandably very negative but as the dust settled and it became clear that talks will continue this week, the hysteria passed and investors instead went into self-preservation mode telling themselves that surely this is only a negotiating tactic. Surely months of talks can’t collapse this late in the day. The chances are they’re probably right but the tone of the negotiations now appears to have become less friendly which means the deal is in jeopardy.
