Global share prices went tumbling after Tuesday’s rout on Wall Street. And the trigger is being blamed on deepening confusion over exactly what Donald Trump and Chinese President Xi Jinping have agreed to if anything.
From the beginning of the week Trump’s description of the deal, the result of a dinner at the G20 summit, differed in significant ways from China’s characterization. Chinese media, describing the agreement, failed to mention major points of agreement the administration claimed, such as resolving within 90 days such key issues as “forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture,” according to an official White House statement.
Initially, Trump’s statements sparked a big rally Monday on Wall Street. But then, on Tuesday, White House personnel had an increasingly difficult time explaining exactly to what the two leaders had agreed.
“There was a rally in the expectation that something had happened,” Willie Delwiche, an investment strategist at Baird, told the Associated Press. “The problem is that something turned out to be nothing.” U.S. officials further tried to downplay expectations, according to the Washington Post.
That sparked a slide on Wall Street yesterday, where the S&P 500 dropped 3.2% while the Dow lost 3.1% and Nasdaq, 3.8%. Today, the FTSE in London is off by 1.3% and Germany’s DAX dropped 1.1%. Hong Kong’s Hang Seng is down 1.6% and Tokyo’s Nikkei, 0.5%. Oil prices also fell as concern over a possible recession grew.
China has promised to stop trade skirmishes with the U.S., according to AP, but offered no details that might leave investors feeling more secure.
The U.S. stock market is closed on Wednesday for a national day of mourning over the death of former President George H.W. Bush. The pause may give markets a chance to calm.