Dow futures drop 250 points after Chinese media reports that trade talks have made no progress – CNBC

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U.S. stock market futures plunged after the South China Morning Post reported on Wednesday evening that the U.S. and China made no progress in deputy-level trade talks this week.

The report added that higher-level talks including 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.

Dow Jones Industrial Average futures lost more than 300 points at one point and were last down 256 points, or around 1%. S&P 500 and Nasdaq 100 futures were also down 1%. Shares of key stocks related to global trade declined in after hours, with Apple and Caterpillar both down more than 1%. Intel shares were down more than 2% in after-hours trading and Micron Technology lost nearly 2%.

The White House did not immediately respond to CNBC’s request for comment. The issue of forced technology transfers, which China refused to put on the table, was the reason talks were at a standstill, the report said.

Tom Block, Fundstrat Washington research strategist, said the latest affront to China was the U.S. imposition of visas 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.

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, according to this report.

“The volley is now in the administration’s court,” said Quincy Krosby, chief market strategist at Prudential Financial. She noted, however, that 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.

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.

Source Article from https://www.cnbc.com/2019/10/09/us-futures-drop-after-chinese-media-reports-that-us-and-china-have-made-no-progress-in-trade-talks.html

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