Yuan Plunges, U.S. Stock Futures Drop on Trade War: Markets Wrap



  • Trump threatens to jack up China tariffs this coming Friday
  • Tweets risk upending months of progress in bilateral talks

China’s yuan plunged the most in three years and equity markets were roiled after President Donald Trump’s threat to increase tariffs on Chinese imports cast a cloud over talks this week that were expected to finalize a trade deal.

The yuan slumped as much as 1.3 percent against the dollar, and Chinese shares tumbled more than 5 percent when the market opened after a holiday. Futures on the S&P 500 Index sank as much as 2.2 percent after Trump tweeted a plan to hike tariffs on Friday and China was reported to consider delaying the upcoming talks. The Australian dollar also fell, while the yen climbed. West Texas Intermediate crude declined almost 3 percent. U.S. Treasury futures soared, with the cash market closed due to a holiday in Japan.

Yuan Plunges, U.S. Stock Futures Drop on Trade War

Yuan Plunges, U.S. Stock Futures Drop on Trade War

Trump ramped up pressure on China to make concessions in talks scheduled to be held in Washington this week by threatening to more than double tariffs on $200 billion of Chinese goods, and impose a fresh round of import taxes on top of that. Chinese Vice-Premier Liu He was scheduled to arrive in Washington on Wednesday with a delegation of about 100 people, but now China is considering delaying that trip, according to people familiar with the matter.

“It’s making the outcomes more binary, with everybody focused on the Friday deadline. There doesn’t seem to be much leeway now to much go past that,” Joyce Chang, chair of global research at JPMorgan Chase & Co., said on Bloomberg Television. “It’s going to mean that investors will be very focused on the trade issues even beyond China,” with a review of U.S. auto-import tariffs still pending, she said.

Adding to the mix, North Korea carried out a weapons test, that potentially included its first ballistic missile launch since 2017, challenging Trump’s bottom line in nuclear talks. Meantime, oil’s slide was exacerbated by news that Saudi Arabia cut June pricing for all crude grades to the U.S., while raising most pricing to other regions.

China’s financial markets are trading for the first time since last Tuesday after a long holiday, with the nation’s equities already under pressure amid concern the government stimulus won’t be as robust as many had anticipated.

Trump’s comments came after the S&P 500 Index rose the most in a month Friday, with April employment data suggesting the American labor market can support growth without sparking inflation. With Japan’s markets are closed for a holiday Monday, Treasuries won’t trade in the cash market in Asia.