Dow Struggles for Momentum as China Reignites Trade War

Dow Jones, Dow Futures, Dow
The Dow is looking at a limp opening as the US and China lock horns again in their ongoing trade war. | Source: Shutterstock

Dow Jones futures struggled for traction on Wednesday, pointing to a flat open on Wall Street.

Traders are yet again weighing the impact of a trade war as China moves towards a hard-line stance on negotiations. It comes just a day after Trump said there was “a long way to go” and threatened further tariffs.

Dow Jones flat ahead of Wednesday’s open

As of 7.25 am EST, Dow Jones Industrial Average futures traded at 27,334, a mere 6 points higher (0.02 percent).

Dow futures chart

S&P 500 futures were similarly unchanged at 3,008 while Nasdaq Composite futures held at 7,953.

China takes a hard line on negotiations

Xi Jinping has reportedly invited a new member to the negotiating table and, according to the White House, he’s a tough negotiator.

Commerce Minister Zhong Shan is a known hard-liner and may push Jinping towards a more stubborn line in the forthcoming talks. As former White House negotiator Clete Willems told CNBC:

“China has now elevated its commerce minister Zhong Shan and made him a part of the core negotiating team along with (Vice Premier) Liu He. A lot of people are nervous — he’s seen as a hard-liner.”

Willems did, however, point to China’s shrinking economy, which slowed to 6.2 percent, as a sign that China is desperate to do a deal.

Dow in trouble?

Trade war fears have dominated stock market strategy so far this year, so traders may opt for a risk-off approach on Wednesday.

Yesterday Trump surprised the markets with a shock threat to deploy a fresh round of tariffs on China. As reported, Trump admitted there was a long way to go before many of the sticking points between the US and China resolved.

Also on the agenda today is a slew of corporate earnings from the tech sector, including Netflix, eBay, and IBM.

Click here for a real-time Dow Jones Industrial Average (DJIA) price chart.


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