US stocks plummet over lack of clarity on trade deal with China
US STOCKS have nosedived amid concerns about trade and fears of a weakening economy.
The Dow Jones closed down by more than by 3pc in New York yesterday, with industrials and financials leading the declines. The broader S&P 500 was also off 3.2pc.
Trade-sensitive shares were undermined by a failure from Donald Trump’s aides to detail the deal he had struck with China, eroding confidence in the agreement, which still doesn’t exist on paper and hasn’t been confirmed by Beijing.
Speaking about the deal, Trump’s most senior economic adviser Larry Kudlow dialled back expectations about the agreement.
“I’ll call them ‘commitments’ at this point, which are … not necessarily a trade deal, but it’s stuff that they’re going to look at and presumably implement,” Mr Kudlow said. He also said that he “didn’t yet have a specific agreement” on car tariffs, apparently contradicting a tweet by Trump the previous day, which said: “China has agreed to reduce and remove tariffs on cars coming into China from the US”.
Concerns about a weakening US economy saw the yield on three-year US Treasury bonds climb above those of their five-year equivalent this week, the first time in seven years that the yield curve has inverted. This is generally considered a indicator of an contraction.