US stock markets have fallen today after President Donald Trump said his administration was “not ready to make a deal” with China.
The tech-heavy Nasdaq stock index had fallen 1.2 per cent, the S&P 500 had dropped one per cent, and the Dow Jones industrial average had fallen 0.9 per cent.
Speaking at the White House, Trump said: “We’re doing very well with China, we’re talking with China. We’re not ready to make a deal, but we’ll see what happens.”
Stock markets have been increasingly sensitive to any news to emerge about the trade war raging between the two sides.
A sell-off sent them tumbling earlier this week when the Chinese renminbi currency fell to the seven-per-dollar level not seen since the financial crisis, sparking fears of a currency war.
The renminbi was allowed to slide over 1.5 per cent by the Chinese government after the Trump administration slapped 10 per cent tariffs on $300bn of Chinese goods. This means almost all imports from China are tariffed.
US stock markets fell today despite official figures showing a decline in core producer prices in July, two months after Trump ratcheted up tariffs on $200bn of US goods to 25 per cent.
“There is still little evidence that May’s increase in the tariff rate on $200bn of Chinese imports is having any significant impact on firms’ costs,” said Andrew Hunter, senior US economist at Capital Economics.
“That makes it a little more likely that Fed officials will react to any further signs of weakness in the real economy by cutting interest rates again.”
“The next round of tariffs on the remaining $300bn of Chinese imports could have a more notable impact on finished goods prices, given that they will cover a much greater share of finished consumer goods with few alternatives.”
“But it all depends on how aggressively the Chinese allow their currency to depreciate.”