Uncertainty plagues markets ahead of US-China trade talks

Global markets parted ways Wednesday as investors were more cautious about the chances of success in China-US trade talks, and looked for direction from the ECB.

The overall mood remained wary, with a rally that has characterised the start of the year stuttering due to slower Chinese economic activity, a softer global outlook, Brexit issues and the US government shutdown, which shows no sign of ending soon.

"The markets appear to be trading a bit cautious ahead of tomorrow's monetary policy decision from the European Central Bank (ECB) and as US/China trade worries are flaring up," the Charles Schwab brokerage said.

US investors sold shares Tuesday after the Financial Times and CNBC said Washington had rejected Beijing's offer of preparatory discussions ahead of the next round of high-level negotiations.

Wednesday saw a sliver of respite as Wall Street opened just in the black, the Dow Jones adding 1 percent while the tech-heavy Nasdaq rose 0.6 percent.

"We are continuing to see caution in the markets on Wednesday, with reports a day earlier regarding trade talks between the US and China only aiding that," said Oanda analyst Craig Erlam.

"Reports that preparatory talks between the US and China ahead of a meeting at the end of the month had been cancelled put a slight dampener on the mood ... at a time when we're already seeing some profit taking."
"As the headlines continue to get more nerve-wracking with regards to a global slowdown and trade wars and government shutdowns, it's easy to spook investors, but we think those are temporary versus permanent."