By Joyce Yu
Philadelphia, PA–Wall Street opened lower this morning as Trump’s negative comments about the NAFTA negotiation worried investors.
Round one negotiation of NAFTA, a free trade deal between Canada, Mexico and the U.S., is just over. Trump on Tuesday warned that “we’ll end up probably terminating NAFTA at some point.”
“If we have to close down our government, we’re building that wall,” he said at a rally in Arizona.
Investors are feeling “somewhat discombobulated by President Trump’s latest negative comments about the survival of NAFTA,” explained Kit Juckes, a strategist at Societe Generale, the CNN reported.
We are seeing signs that Washington is quite dysfunctional, and more voices in the market are becoming focused on that,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Management, to the Financial Times.
At 11:13am (EDT), the Dow and the S&P 500 were down 0.26% and 0.29% respectively while the NASDAQ slipped 0.2%.
Yesterday’s gains were erased.
Spurred by gains of tech shares on Wall Street and miners in Europe, global equity markets rose Tuesday as investors believe lose monetary policies will continue ahead of the central bankers meeting this week.
The S&P 500 Index jumped 1 percent and the Dow Jones Industrial Average added almost 200 points yesterday. Trading volumes remained subdued despite the rally.
Geopolitical events are expected to continue to weight on the markets. Market volatility increased in the past few weeks for heightened tensions on the Korean peninsula and growing doubts about President Donald Trump’s ability to implement his economic policies.
On the other hand, market sentiment has lifted by the expectation that central bankers will not tighten monetary policies. Given the relatively low bond yields and strong companies earnings, stocks continue to attract buyers.
“The return of bargain hunters after a shallow correction in US markets again demonstrates that investors are reluctant to reduce exposure to equity markets given low bond yields, solid profit growth and a lower US$,” said Ric Spooner, chief market analyst at CMC Markets in Sydney, to the Reuters.
He added, “In a situation where earnings yields on stocks remain attractive in relation to bond yields, investors are reluctant to respond too negatively to ’risk events’ unless they represent a clear and present short term danger.”
Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo, told the Reuters, “The dollar had been caught in a downtrend amid ebbing expectations towards U.S. inflation. It requires a surge in U.S. shares to break this pattern and that is what happened as Wall Street rallied.”
