Analysts' View: Take Navarro's China trade deal is 'over' comments with a pinch of salt

SINGAPORE (Reuters) - U.S. stock futures fell and the dollar rose after White House adviser Peter Navarro said that the trade deal with China is “over”. But President Donald Trump later tweeted that the deal “is fully intact” and said he hoped Beijing would continue to live up to terms of the agreement.

Here are analysts’ views on Navarro’s comments, which were made on Monday in an interview with Fox News:

ANDREW BRENNER, HEAD OF INTERNATIONAL FIXED INCOME, NATALLIANCE:

“Put a muzzle on this guy...we are certain his statement is going to be walked back.

“It was just last week that Secretary Pompeo met with a senior member of the Politburo of China in Hawaii, saying the deal was moving along as China was increasing their purchases of agriculture products...this will be walked back.”

VASU MENON, SENIOR INVESTMENT STRATEGIST, OCBC BANK WEALTH MANAGEMENT, SINGAPORE:

“We had expected U.S. China tensions to escalate in the second half of this year in the run-up to the US elections.

“China hawks ... like Navarro could gain the upper hand and egg (Trump) on to take action against China. So expect markets to be very bumpy in second half of this year because of the double whammy from COVID-19 and U.S.-China tensions.”

MOH SIONG SIM, FX ANALYST, BANK OF SINGAPORE, SINGAPORE:

“With the White House, you can never be sure whether they are voicing their own position or the official position. So I would take it with a pinch of salt.

“If he’s speaking about his own position, it’s pretty much consistent with Navarro. We know he is a hardliner... (but) ultimately it’s Trump who decides whether the trade deal is on or off.”

MICHAEL MCCARTHY, CHIEF STRATEGIST, CMC MARKETS, SYDNEY:

“If the U.S. was going to pull out the trade deal with China, it seems unlikely that it would be done in an off-the-cuff comment on a television show.

“It would be simply nuts at the moment. It was a comment made for domestic political consumption and is probably not a policy shift. I think what they’re saying is we’re playing tough with China...but the market’s falling. It’s possibly one of those cases where all the markets needed was a spark, and they’ve seized on this as a spark.”

ROB CARNELL, HEAD OF RESEARCH ASIA-PACIFIC, ING, SINGAPORE:

“Does that mean we revert to the previous level of tariffs that we had, at the height of the trade war? Because if that’s the case, you’d think that would go down like a lead balloon with markets.

“But it’s also quite confusing...while there’s often no smoke without fire with this stuff, and it can happen very quickly, I just wonder what they seek to gain with this at the moment. Usually there’s a reason, and this only makes things worse.”