US President Donald Trump departs the White House in Washington, DC, for Florida on October 3, 2019.
Jim Watson | AFP | Getty Images
U.S. stock futures dropped Wednesday night after a slew of conflicting reports around Thursday’s U.S.-China trade talks sent investors for a wild ride.
Dow Jones Industrial Average futures lost more than 300 points at one point and were last down 102 points, or around 0.4% as traders tried to make sense of the unfolding situation. S&P 500 futures fell 0.4% and Nasdaq 100 futures also lost 0.4%. Shares of key stocks related to global trade declined in after hours, including Apple, Caterpillar, Intel and Micron.
The initial report that hit futures came from the South China Morning Post, which said the U.S. and China made no progress in deputy-level trade talks this week.
The report added that higher-level talks with China’s Vice Premier Liu He would now be only one day, with the China delegation planning to leave Washington on Thursday instead of Friday as scheduled. The issue of forced technology transfers, which China refused to put on the table, was the reason talks were at a standstill, SCMP reported.
Stock futures later recovered some of those losses after the White House told CNBC’s Kayla Tausche that the SCMP report was inaccurate. “We are not aware of a change in the Vice Premier’s travel plans at this time,” a White House spokesperson told CNBC.
And a senior administration official told Tausche that Liu is still scheduled to depart Friday evening, and dinner is on for the delegation Thursday evening in DC.
However, a principal in the negotiations later told CNBC the schedule has become “fluid,” with Friday’s session an “open question.” One possibility, according to the source, is Vice Minister Liao Min stays in Washington to continue the negotiations but Vice Premier Liu He would leave early. Another possibility is that talks conclude on Thursday after one day of negotiations.
Bloomberg News also reported overnight that the U.S was considering an agreement to suspend next week’s tariff increase in exchange for a currency pact.
“This is the emotional roller coaster that we have to strap in for while these negotiations get hashed out,” Jeff Kilburg, CEO at KKM Financial, said in an email. “The transparency of these negotiations are overwhelming for markets but, I remain optimistic about the outcome.”
U.S. stocks fell on Monday and Tuesday as investors lowered their expectations for a trade deal. Stocks rebounded on Wednesday, however, as traders grew more comfortable with the idea of a partial deal and the postponement of future tariffs, a scenario laid out in various media reports. Now even that seems out of reach given how fluid the situation has become.
But Quincy Krosby, chief market strategist at Prudential Financial, noted the market is used to this back and forth on the trade front by now. “Had this been the first time something like this happened, the market reaction would have been far more strident.”
Tariffs on $250 billion worth of China imports are set to increase to 30% from 25% on Oct. 15 following a two-week delay seen as a goodwill gesture by President Donald Trump. The administration is also scheduled to add a 15% levy on an additional $160 billion worth of Chinese imports on Dec. 15.
On Monday, the Department of Commerce added 28 new Chinese companies and agencies to a “blacklist.” The move soured the tone of the lower-level talks, which were meant to set the table for an actual trade agreement later in the week.
Tom Block, Fundstrat Washington research strategist, said the latest affront to China was the U.S. imposition of visa restrictions on some officials believed to be involved in the detention and human rights abuses of Uyghur Muslims and other minority groups. China reportedly plans to follow the move by restricting visas for Americans it perceives to have ties with anti-China groups.
Block said the U.S. made two strategic missteps this week, with the blacklisting of companies and also the visas, and that will make a deal harder to achieve. “I think it looks less likely every time we take a unilateral action against China,” said Block.
The South China Morning Post had reported earlier in the week that optimism about the talks was dimming on China’s side. The paper is owned by Alibaba and is often criticized for reports seen as favoring the Chinese government.
— CNBC’s Kevin Breuninger and Patti Domm contributed to this report.