- Dow Jones Industrial Average (DJIA) futures traded slightly lower on Thursday.
- US legislation to support Hong Kong protestors has China rattled and may undermine trade deal progress.
- Chinese state media hit back at Trump, threatening “revenge” for interfering in Hong Kong.
Dow Jones Industrial Average (DJIA) futures were slightly lower in early trading Thursday, pointing to a nervous stock market open. It comes as confusion reigns over the state of Trump’s trade war with China.
Throwing fuel on the fire, Trump is preparing to sign a law that will support Hong Kong protestors. It’s a move that will rattle China and may undermine trade talks. The China Communist Party’s newspaper The People’s Daily retaliated with strong language in a front-page editorial this morning.
If the U.S. side obstinately clings to its course, the Chinese side will inevitably adopt forceful measures to take resolute revenge, and all consequences will be borne by the United States.
Dow futures slightly lower on Thursday morning
Dow futures contracts struggles for direction on Thursday, slipping 24 points in premarket trading. It comes as investors remain nervous about broader recession fears.
China’s message to Trump: Back off Hong Kong
The aggressive editorial warned the US to “rein in the horse at the edge of the precipice” after Congress passed two bills in support of Hong Kong protestors.
The bills would allow the US to conduct annual checks on Hong Kong’s autonomy from China. And if found to be insufficient, the US could limit favourable trading conditions in the region. Secondly, it would enable sanctions against officials that violated human rights in Hong Kong.
A spokesman at China’s foreign ministry also struck a retaliatory tone in a statement this morning. Geng Shuang warned Trump to stop meddling in Hong Kong.
We urge the U.S. side to cease this activity, stop before it’s too late and take measures to prevent these measures from becoming law, stop meddling in Hong Kong’s affairs and China’s affairs… If they must insist on going down this wrong path China will take strong counter-measures.
Dow at risk if trade deal is undermined
A former US ambassador to China warned that this issue could choke the talks between China and the US at a critical moment.
“It has an impact on U.S.-China relations. I think this is going to worsen relations” – Max Baucus.
An increasing number of reports indicate that China and the US are further away from a trade deal than previously thought. If Trump signs the Hong Kong bills into law, it could push the phase one deal further down the line.
The good news…
A flicker of optimism emerged this morning as a spokesman for China’s Ministry of Commerce urged everyone to dismiss the “external rumours.” He said both sides are still talking and China is willing to make some concessions.
China is willing, on the basis of equal and mutual respect with the U.S., to work together to properly settle areas of common concern and strive for a phase-one trade agreement.
Chief negotiator Liu He also said he was “cautiously optimistic” about getting the phase one deal done.