A Head Trader Says the Market Got Too Excited About Xi's Speech

(Bloomberg) -- What a difference a day makes.

While U.S. equity futures jumped Tuesday during Chinese President Xi Jinping’s landmark economic speech, in which he called for an upholding of the multilateral trade system, they’re slumping today, even though his U.S. counterpart Donald Trump helped defuse talk of a trade war by praising Xi’s “kind words.” S&P 500 Index contracts fell 0.5 percent on Wednesday.

For Stephen Innes, the head of trading for Asia Pacific at Oanda Corp. in Singapore, investors were too positive about the Chinese leader’s comments Tuesday.

“I think investors’ optimism is giving way to the fact Xi, although apparently toning down the trade war rhetoric, offered little new,” Innes said. “There were no new concessions.”

Innes says the market is “very, very fickle” and there is too much uncertainty. The threat of a trade war isn’t going away anytime soon, he says. Then there’s the situation in Syria, Robert S. Mueller’s investigation of the 2016 U.S. presidential election and talk of a summit between Trump and North Korean head of state Kim Jong Un.

The U.S. president intensified preparations for a response to a suspected chemical weapons attack in Syria, canceling a planned trip this weekend to South America and conferring with European allies on steps to take in response.

“It’s incredibly difficult to hold a view in this market,” Innes said. “I think this is why we see constant gyrations in risk dynamics.”

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