United States reportedly set to delay new Chinese trade tariffs

Wednesday, 11 Dec, 2019

Stocks wobbled on Wall Street in afternoon trading Tuesday as investors considered reports that the US will delay a new round of tariffs on Chinese goods as the nations continue negotiating a trade deal. Dow Jones Industrial Average futures were down as much as 100 points while the S&P 500 and Nasdaq 100 futures also indicated a lower open.

The WSJ reported Tuesday that trade negotiators do not consider Sunday to be a hard deadline for completing a phase one trade deal, even though President Donald Trump has said the USA would raise tariffs on $165 billion in Chinese goods on that date.

The U.S. and China are working toward postponing tariffs on $165 billion of Chinese goods that are set to kick in on December 15, according to officials on both sides. But there has been no sign of agreement on details almost two months later. Meanwhile, China wants its agricultural purchases to be proportional with the amount of tariffs the USA rolls back.

National Bureau of Statistics data released on Tuesday showed China's Consumer Price Index for November jumped 4.5% from a year ago as food prices surged amid an outbreak of African swine fever that devastated pig herds and fueled demand for protein sources. "China trade deal will be completed this week", though officials also said the December 15 tariffs will be delayed.

A US House bill targeting China's camps for ethnic Muslim minorities in Xinjiang has also angered Beijing, further clouding prospects of any deal.

"Yet chip-related shares are doing well, suggesting investors are still positive on the outlook of Sino-U.S. trade talks overall".

Investors were also keeping an eye on the US Federal Reserve, which is expected to keep rates unchanged at its two-day policy meeting, which ends tomorrow. Data showed at the weekend that exports fell more than expected as the tariffs spat with the U.S. grinds on, though imports beat forecasts.

Pork stocks declined broadly after a surge in pork prices accelerated China's consumer inflation in November.

European markets are all lower with the FTSE 100 down 0.45% while Germany's DAX off 0.63% and France's CAC 40 dipping 0.07%. The central bank is expected to highlight the economy's resilience and keep interest rates on hold in the range of 1.50% to 1.75%.

That would tell investors "they have yet again been taken down the trade talk garden path only to end up at the cliff edge of trade war purgatory".

The Nikkei Asia300 Index of companies outside Japan ended 0.1% lower to 1,309.80.

Sterling, which hit its highest level against the dollar since April on Monday, inched up 0.02 per cent to buy US$1.3145 (RM5.4722).

West Texas Intermediate oil futures CLc1 slid 18 cents to settle down at $59.02 a barrel.