World Wide Stocks Surge on US- China Trade Truce
$DIA, $SPY, $QQQ, $SOY
FLASH: President Donald Trump says on Twitter that China has agreed ‘to reduce and remove’ 40% tariffs on cars from the United States.
Futures on the DJIA are currently up 488 points after Presidents Trump and Xi agreed to a 90-day halt to their trade dispute that has concerned world equity markets for most of the year.
In addition to the DJIA, futures for the S&P 500 and the NAS Comp are up like amounts, with futures on Crude Oil and Copper posting large increases as well on hopes a China-US trade deal can boost global economic growth.
In the agreement, President Trump agreed not to boost tariffs on $200-B of Chinese goods from 10 to 25% on 1 January in exchange for Beijing pledging to buy a “very substantial” amount of agricultural, industrial and energy products.
China says the 2 sides also agreed to open up their markets.
This delay on the tariffs hike is on the positive side of expectations. In stark contrast to the fear that the US trade hawks in The Trump Administration would make impossible demands, is clear evidence that President Trump is in charge and working to a trade deal with China inline with his vowed trade policies, 1st Canada/Mexico, 2nd China, and last the EU especially Germany
The DJIA had already rallied more than 5% last week in anticipation of a truce in the trade dispute with China.
What it means, my take:
- China buys things from the US that it needs and may otherwise buy from us; commodities and agriculture, LNG and Soybean the prime candidates.
- The US holds off on increasing tariffs, and
- China and the US agree to talk more on things that matter, longer-term tariff levels, intellectual property and access to markets.
Aka America First!
Have a terrific week.