Wall Street fell more by than three per cent overnight, led by ongoing investor scepticism over the trade truce between US President Trump and China’s President Xi Jinping.
The Dow Jones slid 3.1 per cent, the S&P 500 3.2 per cent, and the Nasdaq 3.8 per cent, leading to one US stocks ETF (Exchange Traded Fund) managed by Russell Investments experiencing its largest one-day drop since 2011.
Concerns are mounting over the lack of meaningful progress on the US-China trade talks, after Trump suggested on Tuesday that he may extend the 90-day trade truce with China.
Trump made it clear he would revert to protectionism if the two sides could not resolve their differences, taking to Twitter to issue a warning with investment implications.
….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN
— Donald J. Trump (@realDonaldTrump) December 4, 2018
Pepperstone’s Chris Weston told Business Breakfast investors are viewing the truce as a “band-aid plastering over the cracks, [that] doesn’t see anything change”.
“You’ve got a three prong situation, one with Trump going after Amazon, being a market darling,” he said.
“The market is fairly confused with Fed communication, and then of course you’ve got that perhaps the trade wars have already done their damage, that’s why we are seeing a flatter curve.”