Wall Street Shrugs at Trump-Xi Summit as Stocks Drop Worldwide
Fortune reported Thursday that global equities tumbled after President Donald Trump returned from his Trump-Xi summit in Beijing with little more than vague pledges and a below-expectations aircraft order.
Markets Sell Off Across Every Region
S&P 500 futures fell roughly 1% before New York’s opening bell. European indices fared worse, with the Stoxx 600 shedding 1.28% and London’s FTSE 100 down 1.42% by midmorning. The sharpest move came in South Korea, where the KOSPI dropped more than 6%. Japan’s Nikkei 225 lost almost 2% and China’s CSI 300 fell 1.12%. Bond markets also weakened, pushing the 30-year Treasury risk premium above 5%.
Boeing Bore the Brunt of the Letdown
Boeing shares lost nearly 5% on Wednesday and fell a further 1.4% in overnight trading. Trump announced China would purchase 200 aircraft from the manufacturer. That figure trailed a White House suggestion of 500 planes ahead of the trip. It also fell short of the 300 aircraft sold during Trump’s 2017 China visit, leaving investors underwhelmed.
Analysts See Symbolism Over Substance
UBS global chief economist Paul Donovan told clients the summit had burned considerable resources to deliver very little. He noted that pledging stable trade ties is hardly a meaningful concession, given instability has defined US trade policy for over a year. At Deutsche Bank, strategist Jim Reid flagged a separate disappointment. Any hope that Beijing might help broker a resolution to the Iran conflict did not materialise. Trump also told reporters the US does not need the Strait of Hormuz open at all, rattling energy markets further.
Background: Oil, the Dollar, and the Fed
The Strait of Hormuz comment pushed Brent crude to $109 per barrel, up from $103 the previous session. Oil priced in dollars keeps the greenback elevated against most currencies. Analysts at ING noted the summit had been expected to cap dollar strength and lift sentiment broadly. That outcome did not arrive. Elevated oil also stokes inflation, reinforcing expectations that the Federal Reserve will hold rates higher for longer.
ING strategist Francesco Pesole said the results had so far proved too thin to shift the broader market mood, in a note seen by Fortune.
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