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US-Chinese trade talks hit rocky ground

While Theresa May is trying to strike a deal with the opposition party, the US accuses China of backtracking on its trade promises.

Centtrip: US, China agree talks date for October

The upcoming round of negotiations between Washington and Beijing may be in jeopardy as the US yesterday, 6 May accused China of reneging on its promises.

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin claimed China was trying to “renegotiate” and threatened to expand US tariffs on $200 billion’s worth of Chinese imports to 25 per cent as soon as this Friday. Mnuchin and Lighthizer raised concerns, saying negotiations seemed to be going “substantially backward” and Washington was “not willing to go back on documents that have been negotiated”.

The comments rattled financial markets, causing a sharp pull-back in US stocks, with the Dow Jones Industrial Average down 0.3 per cent at close. However, Lighthizer still suggested that the trade talks will continue this week, but US officials are likely to maintain their hard-line stance.

The Dollar has responded by giving up some gains made towards the end of last week on positive non-farm payroll data. The greenback dropped by almost 1 per cent against the Pound from the Friday low of 1.2991. The jobs report for April showed the US economy added a robust number of 263,000 jobs last month and the unemployment rate fell to 3.6 per cent – the lowest level in nearly 50 years.

In Europe, BMW has reported a 78 per cent slump in profits for the first quarter of 2019. The German car maker has set aside €1.4 billion to cover a possible fine from EU antitrust authorities as a result of the EU’s investigation into alleged collusion on cleaner-emission cars.

Elsewhere, the Royal Bank of Australia (RBA) decided to leave interest rates on hold overnight, providing some much-needed respite to the Australian Dollar, which has suffered of late. However, some economists claim that this is unlikely to indicate a new direction for the RBA, which will probably cut rates after the Australian election.

Today is light on data, with the EU economic forecast taking the spotlight at 10:00 (GMT).

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