U.S. President Trump’s well-document loose relationship with facts may bite markets across Asia on Wednesday as his claims of agreements with China that appeared to hit a pause button on his trade war weren’t being confirmed.
Derek Holt, head of capital markets economics at Scotiabank, said on Tuesday that markets were taking a hit from a “weak excuse” that Chinese President Xi Jinping isn’t commenting on U.S. claims China would lower auto tariffs was because he was traveling.
“In a day and age when a country’s leader can lead from anywhere at any time, the excuse isn’t going over well and markets are assuming that President Trump stretched the meaning of what he discussed with President Xi,” Holt said in note. “Maybe President Xi is just stalling on what to say without embarrassing Trump.”
Other analysts echoed the sentiment.
“This current meltdown has all the nasty hallmarks that traders typically call the perfect storm after investor confidence took a shellacking overnight and are probably left feeling duped, tricked and maybe even snookered by some ill-advised backslapping comments post G-20,” Stephen Innes, head of Asia Pacific trading at OANDA, said in a note on Wednesday.
The U.S. trade war had appeared to at least have been put on a partial hiatus after the G-20 meeting in Buenos Aires over the weekend, with Trump and Xi initially reported to have agreed to hold off on planned tariff increases for 90 days while trade talks continue.
But signs were emerging that the U.S. side had over-hyped what actually came out of the meeting, with Chinese officials failing to confirm what Trump announced and as Trump launched another of his signature, erratic tweet-storms. Chinese officials reportedly didn’t even confirm there was a 90-day agreement.
While Trump had claimed China would “reduce and remove” tariffs on its imports of U.S. autos, White House adviser Larry Kudlow reportedly said there was no specific agreement, just that it was expected. He also reportedly said that there were “no assurances” China would change its trade course.
The Washington Post reported that a former U.S. government official said that Chinese officials were “puzzled and irritated” by the Trump administration’s post-meeting moves, with the official calling it “madness.”
In his latest tweet-storm, Trump called himself “Tariff Man” and threatened “major Tariffs [sic]” if China doesn’t agree to a “REAL DEAL [sic].”
We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future….
— Donald J. Trump (@realDonaldTrump) December 5, 2018
Japan’s Nikkei 225 index was down 0.75 percent at 8:16 A.M. SGT, while South Korea’s Kospi was off 1.05 percent at 8:21 A.M. SGT.
Singapore’s Straits Times Index ended Tuesday down 0.72 percent at 3167.79; December futures for the index were at 3164 on Tuesday, while January and February futures were at 3167 and 3169 respectively.
Hong Kong’s Hang Seng Index was up 0.29 percent at 27,260.439 on Tuesday, while China’s CSI 300 was up 0.21 percent at 3267.709.
Malaysia’s KLCI index was down 0.28 percent at 1694.99 at Tuesday’s close, while Indonesia’s IDX Composite added 0.56 percent to 6152.86.
The Dow Jones Industrial Average tumbled 3.10 percent to 25,027.07, the Nasdaq Composite dropped 3.80 percent to 7158.426 and the S&P 500 lost 3.24 percent to 2700.06. Futures for the three indexes were slightly higher in early trade.
U.S. markets will be closed Wednesday for a day of mourning after the death of former President George H.W. Bush.
Nymex WTI crude oil futures for January were down 0.88 percent at US$52.78 a barrel at 7:58 A.M. SGT, while ICE Brent crude oil futures for February were up 0.63 percent at US$62.08 a barrel at 6:59 A.M. SGT, according to Bloomberg data.