FTSE 100 subdued ahead of US-China trade deal meeting
The FTSE 100 has opened almost flat ahead of US President Donald Trump’s meeting with Chinese vice premier Liu He, where the pair are set to sign an initial trade deal.
Britain’s blue chip index was sitting 0.08 per cent up in morning trading ahead of the signing on Wednesday. Both US and Asian markets dipped in anticipation of the deal.
Read more: US markets hit fresh record high on trade deal optimism
The US-China trade war is expected to enter a new, quieter phase following the signing of the deal, which aims to dramatically increase Chinese purchases of US manufactured products, agricultural goods, energy and services.
Having hit intra-day record highs on Tuesday, the S&P 500 and Nasdaq both turned negative after US Treasury Secretary Steve Mnuchin said the country would maintain tariffs on Chinese goods until after the November presidential election.
The indexes closed 0.15 per cent and 0.24 per cent down respectively. Having also hit record intra-day highs, the Dow lost some ground to close 0.11 per cent up.
Asian markets were also subdued on Wednesday ahead of the crucial signing event at the White House, slipping into their first decline in five sessions.
Shanghai’s SSE Composite closed 0.54 per cent down, while Japan’s Nikkei 225 closed 0.45 per cent down.
Hong Kong’s Hang Seng index fared marginally better, ending the day 0.39 per cent down.
“Hopes that phase one could start straight away have been dashed but it’s unclear how hopeful markets were that could happen anyway,” said London Capital Group head of research Jasper Lawler.
“The important thing about the phase one deal was just that it represents a ceasefire. Uncertainty about how far and how quickly tariffs could go was very destabilising for investment decisions,” he added.
The phase one agreement due to be signed on Wednesday caps off 18 months of trade conflict between the two largest economies in the world that has hit hundreds of billions of dollars in goods and rattled financial markets.
Trump and Liu are set to sign the 86-page document in front of 200 guests at the White House.
The centerpiece of the deal is a pledge by China to purchase an additional $200bn (£154bn) worth of US goods over two years to cut a bilateral US trade deficit that peaked at $420 billion in 2018.
Read more: Will Trump suspend planned tariffs after reaching a China trade deal?
Citing a source briefed on the deal, Reuters reported that China will purchase an additional $80bn of US manufactured goods over the periods, including aircraft, cars, agricultural machinery, and medical devices.
Beijing will also boost energy purchases by some $50bn and services by $35bn, while agricultural purchases will get a $32bn lift over the two years, all compared to a 2017 baseline of US exports to China, according to Reuters.