Chinese Stocks Fall as Investors Puzzle Over US-China Trade Progress
Chinese stocks slid suddenly before a second day of US-China trade talks in London. While it wasn't immediately clear what caused the slide, some investors pointed to earlier commentary on a social media account affiliated with state broadcaster CCTV, which said that 'the US should realistically view the progress made and revoke negative measures against China.' Beijing is earnest about trade talks with the US but is at the same time principled, it added.
Hopes that trade negotiations will help ease tensions between the world's two largest economies had spurred a sharp rebound in Chinese shares in recent weeks. 'People seem to be speculating that the talks didn't go well,' said Fu Shifeng, investment director at Cheng Zhou Investment. 'The rally in gold prices as well as rare-earth stocks seems to suggest that.'
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SINGAPORE (Reuters) -U.S. and Chinese officials said they had agreed on a framework to put their trade truce back on track and remove China's export restrictions on rare earths while offering little sign of a durable resolution to longstanding trade differences. China's Vice Commerce Minister Li Chenggang said the two teams had agreed on implementing their Geneva consensus and would take the agreed framework back to their leaders. MARKET REACTION: Share markets and the dollar were guarded, with S&P 500 futures down 0.3%, while awaiting more detail of what was decided and whether it would stick. QUOTES: CHRIS WESTON, HEAD OF RESEARCH, PEPPERSTONE, MELBOURNE: "The devil will be in the details but the lack of reaction suggests this outcome fully expected. "While clearly a positive outcome, the lack of reaction in S&P500 futures, and the incremental moves seen in CNH or AUD, suggests achieving the framework on the Geneva agreement was fully expected – the details matter, especially around the degree of rare earths bound for the US, and the subsequent freedom for US produced chips to head East, but for now as long as the headlines of talks between the two parties remain constructive, risk assets should remain supported." LIN GENGWEI, CO-FOUNDER AND CEO, RAIN TREE PARTNERS, SINGAPORE: "Both sides have the pressure, and willingness to reach an agreement. This is temporary achievement in talks but will not alter the pattern of perennial Sino-U.S. rivalry. "The U.S. will not completely remove restrictions on chip exports to China, but may relax the curbs in response to pressure from both Beijing and the domestic semiconductor sector." MARK DONG, CO-FOUNDER OF MINORITY ASSET MANAGEMENT, HONG KONG: "This is positive news to the market. 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The whole year has been littered with positive omens about reaching agreements and then we haven't really seen substantial progress or we've seen backsliding on things that were seemingly agreed so. "Our view is still that whatever does get agreed in the coming weeks and months, the baseline view is that we're going to end up with a global tariff situation which is far worse than existed prior to Trump's ascent to the presidency so we're still going to have a tariff environment we believe will be detrimental as far as global growth is concerned." TONY SYCAMORE, MARKET ANALYST, IG, SYDNEY: "If we keep the terms of the Geneva Agreement, we're looking at US tariffs on Chinese goods staying at 30% for a period of time and Chinese tariffs on US goods at 10%. So that's down from 145% and 125% respectively. That would be fantastic. "Now that for me was probably the market consensus ... and now people just trying to work out whether they're gonna buy or sell the US dollar and that's I think reflecting a bit of that indecision. "That's why U.S. equity markets are holding at this point of time. I still feel like they're overcooked and they need to pull back. It's just been a remarkable run and we're sort of pushing up now against the record highs from February, so for me, it would make sense for them to take a breather." DAVID CHAO, GLOBAL MARKET STRATEGIST, ASIA PACIFIC, INVESCO, HONG KONG: "The recent headlines that we've seen is that the US and China - they're ready to make a deal, I think from both sides, and that is a very good sign for markets as well as for policymakers in both countries. Because ultimately, cooler heads will prevail, and we think that the road has been laid for closer dialogue between the top leaders between the two countries. "Today's news about the US and China striking a potential deal on things like rare earths or access to semiconductors or jet engine equipment, that is a very good indication that we have moved through peak tariff uncertainty." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
