On June 29, speaking to reporters after meeting with Chinese President Xi Jinping on the sidelines of the G20 conference in Osaka, Japan, US President Donald Trump said he would not impose new taxes on Chinese goods. "At the present time" after China agreed to buy a large amount of US agricultural products.
Trump also said it would allow telecommunications equipment and smartphone companies from China to continue a number of products from US suppliers. Huawei is falling into a miserable situation because it was blacklisted by the US Department of Commerce last month for national security reasons, making it impossible for US companies to sell to the company without approval. US government.
For Wall Street investors, 4-7 National Day celebrations seem to arrive early this year when they have such positive information.
Analysts say that some assets, from technology stocks to commodities, may respond positively to the results of a high-level meeting of US-China in Osaka when markets reopen tomorrow. (1-7). However, the exhilaration in financial markets may not last long when investors cautiously dissect the long-term effects of this meeting.
The most obvious winner after the US-China high-level meeting will be US technology companies that have direct or indirect business relationships with Huawei. Speaking after the meeting with Mr. Tap, Mr. Trump said that US technology companies could continue to sell components to Huawei as long as there were no major national security issues related to them. This information can help stocks of Huawei supply companies such as Qualcomm, Intel, Nvidia, Advanced Micro Devices, Broadcom ... increase their prices.
Stocks in general on the US stock market may increase thanks to the relatively good results of the US-China high-level meeting. But whether the price increase will last is still a question mark. Taxes imposed on $ 250 billion of Chinese goods remain the same and plans to impose new taxes on more than $ 300 billion of Chinese goods are suspended but not eliminated.
The most basic disagreements between the US and China including intellectual property protection are still unresolved. This means that the current conflicts between the two largest economies and the general trade instability remain a major obstacle to global growth.
The US stock market has seen the best increase in June in the last 60 years mainly thanks to expectations that the US Federal Reserve (Fed) will cut interest rates in the coming months because of concerns about the impact of Trade war for the US economy. But if trade tensions cooled down thanks to the US and China stopping new tax imposition, this will certainly reduce the prospect of Fed cutting interest rates.
Mansoor Mohi-uddin, macro strategist at NatWest Markets (Singapore), said: “Investor sentiment will be optimistic next week thanks to the US-China trade ceasefire agreement. The financial markets will not reduce much expectation that Fed cut interest rates despite global trade tensions cooled down. So stocks, commodities and emerging markets will increase in prices while safe assets like the US dollar, Japanese yen and Swiss franc will be less attractive. ”
Stephen Innes, Vanguard Markets in Bangkok, said that resuming US-China trade talks was a market-forecast scenario but that the two sides could not set a time limit to reach a trade agreement. stock market’s prospect of increasing. He forecast markets will "calm down" during the opening session 1-7.
Raymond Yeung, chief economist of ANZ branch in Hong Kong, said the result of meeting Donald Trump - Xi Jinping in Osaka, is similar to the result of their meeting on the sidelines of the G20 conference in Argentina. Last December, therefore, it was impossible to convince investors that trade tensions were about to be resolved.
He said: "The United States and China have not made any progress on important issues, such as US requirements that force China to strengthen protection of intellectual property assets and stop forcing technology transfer. . Trump’s softer stance seems to be motivated by the interests of American businesses when billions of dollars of contracts for American farmers and suppliers for Huawei are affected. ”
Alfonso Esparza, senior market analyst at Oanda brokerage firm in Toronto, Canada, said: “Crude oil prices will increase after positive trade news. Gold will be under pressure, as commercial optimism reduces the appeal of the precious metal as a safe haven. ”
Meanwhile, Banny Lam, director of research at CEB International Investment in Hong Kong, said that the results of the US-China high-level meeting were exactly the same as what the market forecasted so positively impacted the market. Stock market will not be much.
"I think the US-China summit in the G20 helps stop escalating trade tension between the two countries rather than solving problems," he said. The United States and China may want to reach an agreement early as their economies are under pressure but this is extremely difficult.
