U.S. Stock-Index Futures tumbled after President Donald Trump said China “broke the deal” that he was negotiating on trade, days after he threatened to raise tariffs on billions of dollars in Chinese imports. S&P 500 Index futures contracts expiring in June fell 0.3% overnight in Tokyo after Trump made comments on trade talks at a campaign rally Wednesday in Panama City Beach, Florida. Dow Jones Industrial Average contracts were down 0.3% while those on the Nasdaq 100 were down 0.4%. Trump’s comments come as top Chinese trade negotiator Liu He travels to Washington Thursday for further talks. The president added that, “whatever happens, don’t worry about it. It will work out. It always does.” Earlier, U.S. stocks fell for a third day as an escalation in trade tensions prompted investors to question whether China and America will make progress as talks resume this week. The dollar rose and Treasuries fell. The S&P 500 swung between gains and losses for much of the day as markets sought a measure of calm after the White House suggested a deal was still possible even as both sides threatened to raise tariffs as soon as Friday. Stocks had swooned 2 percent to start the week as trade tensions escalated. A late drop in Intel helped to weigh on tech shares.

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Beijing’s top trade negotiator, Liu He, is traveling to the U.S. on Thursday and Friday for the high-stakes talks. U.S. officials have said Chinese negotiators reneged in the past week on provisions in a draft deal the U.S. considered settled. The developments raise the prospect that talks between the U.S. and China to resolve their trade war could collapse entirely.

An escalation of Trump’s rhetoric on trade in the past few days appears to have caught global equity markets off-guard. Many had been testing record highs, seemingly priced to perfection on the assumption a deal between the U.S. and China would get done. The likes of JPMorgan boss Jamie Dimon still put the odds of that at 80 percent, and the S&P 500 has only fallen to levels seen a month ago.

Equities

The S&P 500 Index closed 0.2 percent lower at 2880 while, the Nasdaq Composite Index dropped 0.3 percent and the Dow Jones Industrial Average added less than 0.1 percent. In Europe the Stoxx Europe 600 gained 0.2 percent. This gain will likely be reversed when European Markets open this morning. Meanwhile the MSCI Emerging Market Index dropped 0.7 percent.

Currencies

The Bloomberg Dollar Spot Index gained 0.2 percent, as the Dollar closed higher for a third straight day. The Euro was little changed at $1.1191, while the yen strengthened 0.2 percent to 110.13 per dollar, the fourth consecutive daily increase. As a result of the worsening political situation in Britain the Pound weakened 0.5 percent to $1.3008, the third straight decline. Elsewhere, the yuan edged lower as data showed Chinese exports unexpectedly fell in April and imports rose. The New Zealand dollar slumped more than 1 percent as the central bank cut interest rates, though it later pared most of the drop. In emerging markets, the lira extended losses against the dollar amid the fallout from Turkey’s decision to re-run municipal elections in Istanbul. The South African Rand strengthened as the country headed to the polls for a national election.

Bonds

The yield on 10-year Treasuries rose two basis points to 2.48 percent, the first decline in four days. In Europe, Germany’s 10-year yield fell less than one basis point to negative 0.05 percent.

Commodities

Apart from Bitcoin it was another quiet trading session for the Commodity Markets. West Texas Intermediate rose 0.9 percent to $61.92 a barrel, while Gold declined 0.3 percent to $1,281.25 an ounce. As a result the Bloomberg Commodity Index was little changed. Meanwhile Bitcoin is trading over $6000 this morning with the market now up over 50% in the last few weeks.

This morning on the Economic Front we have no data of note from either the UK or the Euro-Zone. At 1.30 pm we have US PPI, Trade Balance and the Weekly Jobless Claims. Also at 1.30 pm Fed Chair Powell is speaking about the US Economy. Finally at 3.00 pm we have Wholesale Inventories.

Meanwhile the Fed’s Bostic and Evans are speaking at 2.45 pm and 6.15 pm respectively.

June S&P 500

My S&P plan worked well with the market trading lower to my 2873 buy level before rallying to my 2881 T/P level with a rally above 2895 and I am now flat. The 50 Day Moving Average has moved lower to 2858 and with Chinese Premier He in Washington for Trade talks I would this area to hold initially. As a result I will again look to buy the S&P on any further dip lower to 2847/2859 with a 2839 stop. I still do not want to be short the S&P at this time.

EUR/USD

The boring sideways action in the Euro continues and I am still flat. Today I will leave my 1.1240/1.1280 sell level unchanged with the same 1.1305 stop.

June Dollar Index

No Change as I am still a seller on any rally higher to 97.85/98.25 with the same 98.55 stop.

June DAX

The DAX just missed my 12240 sell level before having a small sell-off and I am still flat. Today I will raise my sell level to 12275/12350 with a 12405 tight stop. I still do not to be long the DAX at this time.

June FTSE

The FTSE just missed my 7120 buy level before spending the rest of yesterday’s trading session moving higher and I am still flat. Today I will raise my buy level to 7100/7145 with a higher 7060 stop.

Dow Rolling Contract

My Dow plan also worked well with the market trading lower to my 25850 buy level shortly after the European Markets opened before rallying to my 25920 T/P level and I am now flat. Worryingly for the Bulls is the fact that the Dow could not breach its October 3 high from last year while the market has also closed below its 50 Day Moving Average (26082) for the last two days. The Dow has strong support from 25580/25740 and today I will be a  buyer on any dip to this area with a 25495 stop. The Dow has now fallen over 800 points since last Friday and as I still expect some sort of favourable Trade Agreement I am reluctant to be short despite the bearish price action over the past week.

June NASDAQ

Shortly after I posted yesterday morning the NASDAQ was trading at my 7670 T/P level on my latest 7635 long position. Overnight the NASDAQ finally traded lower to my second buy level at 7590. I am still long and I will now lower my T/P level on this position to 7610. If my 7610 T/P level is filled I will again look to buy the market on any further dip lower to 7480/7525 with a 7435 tight stop.

June BUND

The European Markets opened below my revised 166.00 T/P level on my 166.10 short position from Tuesday and I am still flat. The BUND has strong resistance from 166.45/166.85 and today I will be a seller in this area with a 167.15 stop.

Gold Rolling Contract

Gold made a high at 1291 shortly after the US Markets opened before spending the rest of the New York session trading sideways to lower and I am still flat. I am reluctant to chase this market higher and today I will leave my 1258/1266 buy level unchanged with the same 1249 stop.

Silver Rolling Contract

Overnight Silver traded lower to my 14.80 buy level. I am still long and today I will now lower my T/P level on this position to 14.95.