US-China Trade Talks and Its’ Effects on the Stock Market!

by Ian Harvey
October 11, 2019


US-China trade talks seem to be moving forward positively, despite several set-backs earlier in the week. The stock market reacted optimistically sending the major indexes upwards.

What is expected from today’s talks, and President Trumps meeting with Vice Premier Liu He?

Where will the stock market head from here? Find out!

US President Donald Trump sounded an optimistic note at the end of the first day of US-China trade talks in Washington DC.

"We had a very, very good negotiation with China," Mr Trump told reporters after the trade talks wrapped up.

Mr Trump will meet directly with Vice Premier Liu He at the White House on Friday.

Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce sounded optimistic about the chances of progress, noting that Beijing has stepped up purchases of U.S. soybeans in a goodwill gesture. He said he hoped a productive meeting would persuade the Trump administration to call off or postpone plans next Tuesday to raise tariffs on $250 billion of Chinese imports from 25% to 30%.

Previous Obstacles to the Stock Market Progress.....

Earlier in the week, the US government blacklisted 28 Chinese entities it said were "implicated" in human rights abuses, and imposed additional visa restrictions for Chinese government officials.

The Chinese Embassy in Washington denounced the visa action and said the US accusations on human rights violations were "made-up pretexts" for interfering in China's affairs.

Although many of the blacklisted entities are government security bureaus, the eight companies named include some of China's leaders in artificial intelligence.

The blacklist could restrict the access of those companies to US microchips, which they currently rely on for many of their products and services.

But Chinese officials indicated more willingness to negotiate and avoid further escalation, according to Chinese state media reports.

"The Chinese side came with great sincerity, willing to cooperate with the US on the trade balance, market access and investor protection," Xinhua quoted Liu as saying on Thursday.

Yesterday’s Stock Market…..

Despite the fact that expectations were low that the negotiations would do much to resolve a 15-month trade battle that is weighing on the global economy, the stock market rallied yesterday on optimism that talks would yield at least a partial truce with the major indexes showing good positive gains.

The Dow Jones Industrial Average added 150.7 points, or 0.6%. The S&P 500 Indexsettled 18.7 points, or 0.6%, higher, while the Nasdaq Composite added on 47 points, or 0.6%.

Moving Forward After Yesterday’s Trade Talks…..

President Donald Trump gave an optimistic read on Thursday’s trade talks between the U.S. and China as the world’s two largest economies try to end a damaging trade war.

“I think it’s going really well. I will say, I think it’s going really well,” the president said. “So we had a very, very good negotiation with China. They’ll be speaking a little bit later, but they’re basically wrapping it up and we’re going to see them tomorrow right here.”

The SPDR S&P 500 ETF Trust, which is designed to track the S&P 500 index, rose in after-hours trading following Trump’s comments. 

Also, stock futures rose on Thursday night, pointing to slight gains on Friday.

Trade Talks and Expectations…..

Many trade experts have low expectations for the trade talks, suggesting an interim deal might be possible, while a major agreement is unlikely.

"I think both sides have an impetus to get to that table. The question is whether there can be a mini-deal that comes out of it. Certainly nothing comprehensive," said Sherry Madera, a former Minister-Counsellor at the British Embassy in Beijing.

Former Deputy Assistant US Trade Representative Matt Gold said that if the trade talks went well, China might make additional agricultural purchases and the US might push back its planned tariff hike.

But he said neither Chinese President Xi Jinping nor US President Donald Trump seem to think ending their trade dispute is urgent.


Although officials are speaking positively about the trade talks, few expect more than incremental progress.

"I think China's looking for a trade truce," said Einar Tangen, a former economic adviser to the Chinese government.

"At this point, it's not clear that there will ever be any kind of big breakthrough. The idea in Beijing is that they will never allow Chinese policy to be made in Washington DC."

Also, bear-in-mind that Mr Trump will meet directly with Vice Premier Liu He at the White House on Friday, therefore, no real decisions as to where the stock market will be headed can be decided until after this meeting.  


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Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


”Success is simple. Do what's right, the right way, at the right time.”

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