US President Donald Trump and China’s Xi Jinping concluded their talks on Thursday at an air base in South Korea, where the two leaders appeared optimistic about calming trade tensions between the world’s two largest economies, according to Reuters. President Trump said he made a deal to reduce tariffs on China in exchange for Beijing resuming purchases of soybeans from the United States, maintaining the flow of rare earth exports, and cracking down on the illicit trade of fentanyl.
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Market analysts react
Kyle Rodda, senior market analyst at Capital.com in Melbourne, noted the price action suggested the news was largely priced in, with markets rising earlier in the week on expectations. “It could be argued that markets were hoping for a complete removal of the fentanyl tariff, so that could explain the discrepancy,” he said.
Vincent Chan, a China strategist at Alethea Capital in Hong Kong, pointed to the lack of details. “The bottom line is that China and the United States are probably each other’s most important strategic competitors. So you can’t expect the kind of trade agreement that we’ve seen during the era of globalization… and any agreement is going to be inherently unstable.” He added that although markets remain volatile, they are lower than they were in April, and that both sides have enough bargaining chips to prevent a worst-case scenario.
Marco Sun, senior financial markets analyst at MUFG Bank (China) in Shanghai, said the meeting calmed financial markets. “The meeting is expected to pave the way for deeper trade and economic discussions between the two countries. Long-term relations and industrial developments are expected to be reshaped through mutual settlement,” Sun said. Emmanuel Datt, director of Datt Capital in Melbourne, expects a broad uptrend in the stock market. “The strongest are likely to be high-beta stocks like technology and biotechnology – as well as traditional sectors like logistics. The weakest stock sectors should be gold and rare earth stocks,” Datt commented.
Source: Market intelligence platform IndexBox
