Hopes for a speedy resolution to the US-China trade impasse lifted Asian stocks early on Friday, but gave way to doubts later in the global trading day that pushed Wall Street lower.
Trading in Asia started with a bang after US President Donald Trump hailed positive talks with Chinese President Xi Jinping (習近平), which was a rare sign of hope in the stand-off between the world’s top two economies.
A report by Bloomberg News later said Trump had asked officials to draw up a bill as he eyes a potential trade deal between the two.
Bourses in Shanghai, Hong Kong and Tokyo all rose more than 2.5 percent, while the positive commentary also boosted European shares, with the pan-European STOXX 600 rising 0.28 percent and MSCI’s gauge of stocks across the globe shedding 0.06 percent.
US stocks too got off to a winning start, but the momentum quickly vanished on doubts about the likelihood of an imminent agreement.
White House economic adviser Larry Kudlow poured cold water on expectations for a breakthrough, telling CNBC that “there’s no massive movement to deal with trade,” in an interview that helped push stocks lower.
Trump then told reporters that he expected a “very good deal” with China, helping to lift stocks marginally from session lows.
However, US stocks finished the session solidly lower, ending a three-day winning streak.
The Dow Jones Industrial Average fell 109.91 points, or 0.43 percent, to 25,270.83, the S&P 500 lost 17.31 points, or 0.63 percent, to 2,723.06 and the NASDAQ Composite dropped 77.06 points, or 1.04 percent, to 7,356.99.
“The wind was taken out of the sails” by the “walking-back” from Trump officials on trade, said Art Hogan, chief market strategist at B. Riley FBR Inc. “The largest headwind in this market is China trade.”
Sentiment on Wall Street was further dented by Apple Inc, which slumped 6.6 percent as investors focused on lower-than-expected volume of iPhone sales and expressed disappointment at the fourth-quarter sales outlook, which was lower than some analysts expected.
In its closely watched jobs report, the US Department of Labor reported that the US last month added 250,000 net new positions, handily overshooting forecasts.
That data, along with the fastest gain in wages since April 2009 at a 3.1 percent annual increase, helped cement expectations that the US Federal Reserve will continue to gradually increase interest rates.
“The key takeaway from that report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path,” Briefing.com analyst Patrick O’Hare said.
Oil giants Exxon Mobil Corp and Chevron Corp rose 1.6 percent and 3.2 percent respectively after both reported big increases in third-quarter earnings, with Chevron’s profits more than doubling to US$4 billion.
Food giant Kraft Heinz Co plummeted 9.7 percent after reporting a 33.3 percent fall in third-quarter profits to US$630 million due to higher costs, but Starbucks Corp surged 9.7 percent after reporting a 3 percent rise in comparable store sales, topping analysts’ expectations.
Additional reporting by Reuters
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