Wall Street Slides On Sino-US Trade Talk Worries

Indices were in the red the entire session after the Commerce Department announced new restrictions on 28 Chinese entities over human rights violations late Monday, drawing an angry rebuttal from China.

Stocks took another leg lower during the afternoon after the US State Department announced new visa restrictions Chinese government and Communist Party officials alleged to have persecuted Muslims in China.

The moves come ahead of major high-level trade talks between the US and China that are set to begin on Thursday.

Besides the new US sanctions, there were also fresh reports citing unnamed Trump administration officials that the White House is mulling new measures to curtail US investment in China.

"It's not a good sign to see these type of measures being put in place just before the trade negotiation resumes," said Tom Cahill of Ventura Wealth Management. "The market is sceptical that anything good can come out of the negotiations this week."

Meanwhile, Federal Reserve chairman Jerome Powell offered a fairly upbeat appraisal of the US economy, saying policymakers still "continue to see a sustained expansion" and that the outlook on jobs and inflation are "favourable."

Powell's remarks suggest the case for further cuts to the Fed's benchmark lending rates could be weakening, with employment data now showing the US jobless rate fell to its lowest level in 50 years in September.

However, futures markets overwhelmingly continue to expect the Fed to cut interest rates later this month. (AFP)