Stock futures for the Dow (INDU), S&P 500 (SPX) and Nasdaq (BANK) are all more than 0.5% lower. On Wednesday, stocks staged a recovery from the fear-inspired selloff and the Dow finished in the green, albeit just barely. On Tuesday, US stocks recorded their worst one-day drop since January.
It's crunch time on the trade front with additional US tariffs on Chinese goods due to take effect after midnight on Friday.
During a rally in Florida late Wednesday, President Donald Trump said he decided to raise tariffs on some $200 billion worth of imports from China because Beijing "broke the deal." He threatened to up existing tariffs from 10% to 25% in a tweet on Sunday.
On Wednesday, China's Commerce Ministry said it considered countermeasures to the increased tariffs. Meanwhile, Chinese Vice Premier Liu He arrived in Washington, which market participants took as a glimmer of hope for a deal to be struck between the world's two largest economies.
Traders have taken Trump latest comments, "as a sign that the relationship between Washington DC and Beijing is going to get worse," said David Madden, market analyst at CMC Markets. "Trade discussions between the two sides will continue today, but investors aren't holding out much hope. Mr Trump is not a man to back down, and it looks likely that this trade spat will move to the next level."
Nevertheless, as of now, the 11th hour talks are set to go ahead, so the negotiations are not entirely dead in the water.
But perhaps investors should try to look "through the headlines to see the forest from the trade war trees," wrote strategists at Rabobank in a note.
"First and foremost, the negotiations are still going ahead today and have not been cancelled, in spite of the exchange of threats."
Nevertheless, global markets aren't looking to rosy on Thursday.
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