U.S. markets and stock exchange traded funds were slightly lower Thursday as mixed updates on U.S. and China, along with the ongoing tensions in Hong Kong, fueled uncertainty over the outlook for the “phase one” trade deal.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) fell 0.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.2% and SPDR S&P 500 ETF (NYSEArca: SPY) was 0.3% lower.
“Even though we’ve been reaching new heights, they were smaller gains on light volume,” Mariann Montagne, portfolio manager at Gradient Investments, told the Wall Street Journal. “It doesn’t surprise us we would have a little consolidation.”
Weighing on investment sentiment, a lack of clarity on trade between the U.S. and China continues to keep pressure on the equity markets. China’s chief trade negotiator late last week invited his American counterparts for a new round of talks in hopes the two sides can meet before the Thanksgiving holiday, but the U.S. hasn’t committed. Furthermore, President Donald Trump censured China’s commitment to a trade agreement, fueling concerns that the world’s two biggest economies are actually further apart from a phase one deal than they appeared.
“The market really doesn’t know what leg to stand on at this stage,” Ole Hansen, head of commodity strategy at Saxo Bank, told the WSJ. “We have this roller coaster, or hamster wheel, on trade.”
Further adding to the malaise, investors who combed through Federal Reserve meeting minutes found officials revealed very little about the next catalyst to resume interest-rate cuts when they previously signaled a pause in rate cuts.
“Markets have been climbing on hopes of a trade resolution and easier monetary policy,” Russ Mould, investment director at asset-management company AJ Bell, told the WSJ. “Now the trade news was negative overnight from China, and the Fed minutes were disappointing insofar as they signaled a wait-and-see approach.”
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