In a post on social media platform Twitter overnight
, Trump said that tariffs of 10% on certain Chinese goods would increase to 25% on Friday, and $325 billion of untaxed goods could face 25% duties “shortly”.
The comments dampened growing positivity in markets that a trade deal between China and the United States was imminent.
“A few hours ago President Trump set the tone for the new week expressing dissatisfaction at the pace of China trade negotiations amid Beijing’s attempt to renegotiate. The President has threatened to lift trade tariffs from 10% to 25% as talks are due to reach their final stage this week,” Rodrigo Catril, currency strategist at National Australia Bank, said in a morning note.
“An increase in tariffs would be bad news for risk assets and would threatened the prospect of a global growth recovery,” Catril added.
Indeed, the base metals have responded poorly to the news with the entire SHFE complex weakening, led by copper.
The most-traded July copper contract on the SHFE fell to 47,970 yuan per tonne ($7,122) as at 9.54am Shanghai time, down by 980 yuan per tonne or 2% from last Tuesday’s close.
Renewed trade concerns were compounded by news reports that China was considering cancelling trade talks with the US, scheduled to begin on Wednesday, after Trump’s tariffs threat.
Nickel was the second worst performer of the SHFE base metals complex with increased supply amid weak consumption further weighing on the metal’s prices.
The most-traded June nickel contract price fell to 96,040 yuan per tonne as at 9.54am Shanghai time, down by 1,770 yuan per tonne or 1.8% from last Tuesday’s close.
“The supply of ferro-nickel is gradually increasing. Meanwhile, the market has seen ample spot supply of nickel, sending more downward pressure from the supply side,” Citic Futures Research said in a morning note.
“Nickel prices are likely to fall further due to negative fundamentals. Stainless steel mills are still relying on the inventories, resulting in weak downstream consumption,” an analyst with Chinese broker Guotai Jun’an Futures said.
– China’s better-than-expected Caixin purchasing manager index (PMI) data failed to lend any support to the base metal prices this morning. The Caixin composite PMI came in at 52.7 in April, down from 52.9 previously, but higher than the forecast 52.5. The Caixin services PMI rose to 54.5 from 54.4, also higher than forecast 54.1.
– In US data last Friday, the non-farm employment change figure improved to 263,000 from 189,000 the prior month, while the unemployment rate dipped to 3.6% from 3.8% previously. The average hourly earnings month on month for the April period were flat at 0.2%, missing expectations of a rise to 0.3%.
– The economic calendar is light today, but the market sentiment is likely to be dictated by the US-China trade talks scheduled for Wednesday in Washington.
– The London Metal Exchange is closed on Monday due to a public holiday in the United Kingdom.