Stocks unsettled after Trump accuses China of trade deal breach
NEW YORK: Global stocks finished mixed on Friday after President Donald Trump put US-China trade tensions back on the boil by claiming Beijing had "totally violated" an agreement with Washington.
His social media post came hours after US Treasury Secretary Scott Bessent said trade talks with China aimed at putting to bed sky-high mutual tariffs – currently suspended – were "a bit stalled."
The development risks renewed trade tensions between the world's two biggest economies.
On Wall Street, the Dow Jones Industrial Average closed higher, while the S&P 500 index was flat, and the tech-focused Nasdaq Composite fell 0.3 per cent.
"If it weren't for the trade war, the market would be feeling pretty good," said Tom Cahill of Ventura Wealth Management.
"Inflation is definitely moving in the right direction," he added, referencing the Federal Reserve's favoured inflation gauge, which cooled more than expected last month, according to fresh data published Friday.
In Europe, London and Germany's major indices ended higher, while France's CAC40 closed lower, following declines in Asian markets earlier in the day.
"If President Trump does slap tariffs back on Chinese imports to the US... we may see demand for US assets, and the dollar, severely impaired by a chaotic and undiplomatic approach to trade policy," said Kathleen Brooks, research director at XTB.
Despite rumbling concerns about the US-China economic relationship, the markets were little changed by Trump's criticism on social media, with investors appearing to be largely inured to the US president's now-familiar cycle of making dramatic trade threats and then retreating.
Investors, traders and analysts instead focused on the Commerce Department's personal consumption expenditures (PCE) price index data, which rose 2.1 per cent in the 12 months to April – cooling slightly more than expected.
Despite the good news for the Fed, which is looking to bring inflation down to its long-term target of two per cent, analysts warned that the fuller inflationary effects of Trump's tariffs were yet to come, and could cause the Fed to maintain its watch-and-wait stance.
"The true weight of these policies is likely to emerge more fully in the months ahead," said FOREX.com market analyst Fawad Razaqzada.
Investors were also assessing the impact of a US court ruling that invalidated most of Trump's sweeping tariffs – though an appeals court suspended that order and the White House vowed that its tariffs goals would be pursued one way or another.
The result leaves Trump's tariff plans in something of "a legal limbo" said Stephen Innes, of SPI Asset Management, adding that this sort of legal impasse was "the kind that keeps traders awake at night."
In the eurozone, interest rates were in focus after official data showed inflation hovering around the European Central Bank's two-per cent target.
Consumer prices in top EU economy Germany showed a 2.1 per cent rise in May – the same as the previous month – while they fell to 1.9 per cent in Spain, and to 1.7 per cent in Italy.
The ECB looks set to lower interest rates again on Thursday.
The dollar gained against major currencies, while oil prices were down ahead of a Saturday meeting of eight key OPEC+ members to decide production quotas for July, with some analysts predicting that the cartel could make a larger-than-expected supply hike.
New York - Dow: UP 0.1 per cent at 42,270.07 points (close)
New York - S&P 500: DOWN less than 0.1 per cent at 5,911.69 (close)
New York - Nasdaq Composite: DOWN 0.3 per cent at 19,113.77 (close)
London - FTSE 100: UP 0.6 per cent at 8,772.38 (close)
Paris - CAC 40: DOWN 0.4 per cent at 7,751.89 (close)
Frankfurt - DAX: UP 0.3 per cent at 23,997.48 (close)
Tokyo - Nikkei 225: DOWN 1.2 per cent at 37,965.10 (close)
Hong Kong - Hang Seng Index: DOWN 1.2 per cent at 23,289.77 (close)
Shanghai - Composite: DOWN 0.5 per cent at 3,347.49 (close)
Euro/dollar: DOWN at US$1.1349 from US$1.1368 on Thursday
Pound/dollar: DOWN at US$1.3463 from US$1.3494
Dollar/yen: DOWN at 143.97 yen from 144.19 yen
Euro/pound: UP at 84.30 pence from 84.22 pence
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