Markets got 'way ahead of themselves' on China trade talks

Donald Trump said he would hike US tariffs on $200 billion worth of Chinese goods this week

The Standard & Poor's 500 index dropped 0.5% to 2,932.47.

"We're not breaking up talks at this point", Lighthizer said. Indices in countries including Australia and Japan also experienced losses. "The discussions we were having-which were taking years to get agreements in place-they all shut down because people said 'let's just wait until this is over".

Prior to Trump's decision to slap tariffs on steel and aluminum imports previous year, Lix says, about 15 percent of his sales were to Europe. They include better protection of USA intellectual property and an end to forced technology transfers from US companies and cybertheft of American trade secrets. Among technology stocks, Microsoft Inc shares slid 2.1%, while Apple Inc shares dropped 2.7%.

Safe-play sectors like utilities held up better than the rest of the market. He also added that the tariff rise could be averted if China changes its stance by 10 May, when the move will be implemented.

The Shanghai Composite Index fell more than 5 percent on Monday while the Stoxx Europe 600 fell by 1.5 percent.

The United States now has 25 percent tariffs on $50 billion of Chinese machinery and technology goods, and 10 percent tariffs on $200 billion of products ranging from computer modems and routers to furniture, lighting and building materials.

Retailers said that concern took on a new level of urgency this weekend when Trump said in a pair of tweets that he would raise tariffs on $200 billion worth of Chinese imports from 10 percent to 25 percent beginning Friday.

Investors fear the world's two largest economies will fail to reach a compromise and the fallout will be a downturn in global growth.

The announcement suggests President Xi Jinping's government is putting its desire to end a conflict that has battered Chinese exporters ahead of the political need to look tough in the face of US pressure. Health care stocks rose.

"We've basically flipped from being too pessimistic to perhaps being too optimistic", he said.

Trump has said that China was paying existing USA tariffs on Chinese imports into the United States, but in reality it is mostly US companies importing the goods that pay the tariffs. "They weren't expecting it, but they do want to get a deal done and sending their top negotiator means that they're serious about that".

Also, to keep United States retail prices in check, the Trump administration has so far targeted goods for which China has a relatively low global market share.

Investors are anxious that additional tariffs, if imposed, could interrupt supply chains and hamper economic growth. This practice of forcing businesses to hand over their secrets has helped China to catch up technologically with the West - but it has been strongly criticised by numerous country's trading partners, in particular the US. It remains low by historical standards, though, after earlier in the year dropping by more than half since the end of 2018.

Beijing is wrestling with an internal conflict: It is eager to end a trade fight that has battered Chinese exporters, but it doesn't want to look like it's bowing to the Trump administration's demands for far-reaching concessions. The Nasdaq fell more steeply, losing 1.8 per cent or 150 points, as tech stocks are heavily exposed to China.

ENERGY: Benchmark U.S. crude lost 7 cents to $62.18 per barrel in electronic trading on the New York Mercantile Exchange.

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