Equity markets improve following softer US-China trade discord, less intense US inflationary pressures.
📢 MARKETS SURGE AS CHINA-US DEAL SPARKS HOPE 📢
Negotiations between the USA and China bore fruit on Wednesday, 11th June, as both nations edged closer to de-escalating their trade tensions. US President Donald Trump announced that the deal with China was done after two days of talks in London.
In a move aimed at cooler heads and calmer markets, both the US and China took a step back from the tit-for-tat tariffs that have wreaked havoc on global trade. The last time they faced off in Geneva, they agreed on a 90-day deadline to tone down the tariffs, which escalated to over 100% on each other's imports. Now, the US has agreed to maintain tariffs on Chinese imports at approximately 55%, with China keeping its tariffs on US imports at 10%.
In a surprise twist, the recent agreement has brought rare earths exports to the forefront. China is a significant supplier of rare earth minerals, essential for various advanced technologies, including smartphones and electric vehicles. The US is hopping to minimize its reliance on China for these vital materials.
Another key point discussed during the talks was China's access to tech goods. The US is considering easing restrictions on these exchanges, likely bringing about a more favorable environment for tech trade. However, these changes hinge on the successful implementation of the agreement, and the potential for further escalation remains.
Investors have greeted this development with relief, as the stock markets have been rattled by the ongoing trade tensions between the two powerhouses. Experts believe that the agreement, while not perfect, has put an end to the worst of the tariff-related turbulence for now. Richard Hunter, head of markets at Interactive Investor, said, "Constructive talks between the US and China have put markets on a firmer footing."
All eyes are on President Xi Jinping and President Trump, as their approval is needed to finalize the agreement. Though the absence of a face-to-face meeting between the two leaders could pose challenges, stakeholders remain hopeful about the potential for greater cooperation between the US and China.
- The relief in the stock markets over the recent US-China trade deal has led some investors to reconsider their finance strategies, as they examine opportunities in investing in technology sectors, given the potential easing of restrictions on tech goods trade between the two nations.
- In the realm of general-news, the political landscape between the USA and China has taken a surprising turn, with both nations agreeing to address issues such as technology trade and China's rare earths exports, demonstrating a new level of diplomatic engagement that could impact global finance and investing, not just in the short term, but also for years to come.
