Stocks rally fades along with hopes of quick US-China trade deal

LONDON: A rally on global stock markets fizzled on Thursday as China poured cold water on US President Donald Trump’s comments talking up the prospects of a deal to end their trade war.

It follows a jump in markets the previous day as Trump signalled that tariffs on China could be substantially lowered and that the United States would have a “fair deal” on trade with Beijing. But China on Thursday said any claims of ongoing trade talks with Washington were “groundless”.

Treasury Secretary Scott Bessent also tempered optimism, saying the two countries are “not yet” talking when it comes to lowering tariffs. “The investing world is back to hanging onto every word out of the White House, but with such a confusing and often contradictory stance on tariffs, volatility is all we can really guarantee,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

City Index and FOREX[dot]com analyst Fawad Razaqzada said that “until we see meaningful resolution on the tariff front, it may well be the case that markets remain in a choppy environment with larger-than-usual swings”. Wall Street opened mixed, while European equities were lower in afternoon trading.

In Asia, Tokyo closed 0.5 per cent higher, while Shanghai ended flat and Hong Kong fell almost 1.0 per cent. Seoul fell after official data showed South Korea’s economy unexpectedly contracted 0.1 per cent in the first three months of 2025.

The dollar weakened as White House uncertainty boosted demand for the Swiss franc, the yen and gold, seen as safe-haven assets. Bessent also said that in its talks with Japan on tariffs, Washington had “absolutely no currency targets”, after repeated comments from Trump that he wants a stronger yen.

Meanwhile investors are also looking to a series of company results for signs of how tariffs may weigh on the outlook for the year ahead. “Comments about tariffs from business leaders are omnipresent and investors want to know how companies plan to deal with potential cost pressures,” said Russ Mould, investment director at AJ Bell.

Shares in consumer goods manufacturer Procter and Gamble slumped 3.5 per cent after it cut its sales and profit forecasts, citing a pullback by consumers amid the tariff and economic uncertainty.

Shares in its British rival Unilever shed 0.5 per cent although it said the impact of US tariffs on its products would be “limited”, as it reported a dip in first-quarter revenue.

Shares in Pepsi slid 1.8 per cent after it too cut its 2025 sales and profit forecasts. Japanese auto giant Nissan predicted an enormous loss of around five billion dollars this year as US President Donald Trump’s tariffs on car imports hit the industry.

In Paris, shares in luxury group Kering fell 2.5 per cent after it reported a further sales slump at its flagship Gucci brand. In Frankfurt, German sportswear giant Adidas gained around 3.0 per cent as its profit almost doubled in the first quarter, beating expectations.

Meanwhile Nintendo shares gained as much as 5.5 per cent after the gaming giant boasted of higher-than-expected demand in Japan for pre-orders of its Switch 2 game console.