US and China agree to reopen trade talks in OctoberThe US and China have agreed to reopen trade talks next month as concerns grow that the tariff war between the world’s two largest economies could
tip the global economy into recession.
Senior negotiators will meet in early October, after a call on Wednesday night between the Chinese vice-premier, Liu He, and the US trade representative, Robert Lighthizer, and treasury secretary, Steven Mnuchin.
Officials from the two countries will hold discussions from mid-September to prepare the way for the talks.
Investors welcomed the news, pushing the S&P 500, the US benchmark stock index, rose by 1.3% and the Dow Jones industrial average ended the day 1.4% higher. Germany’s trade-sensitive Dax index closed up 0.85% on Thursday, while France’s Cac 40 index rose by 1.1%. Shanghai’s CSI 300 index had earlier closed more than 1% higher.
Investors remain cautious, however, with little sign that Donald Trump has any appetite to back down despite the negative effects on the US economy ahead of the
2020 presidential election campaign. The president recently hailed his “very successful trade battle” with China, and said he did not want the US to be “servants to the Chinese”.
Mark Haefele, the global chief investment officer at UBS Wealth Management, said: “Locking down a date for high-level talks is a positive step, and is in line with our expectations for continued talks as both sides try to avoid significantly increasing tariffs.
“However, we still don’t expect a deal to be reached before the 2020 US presidential elections, and our base case is for a prolonged period of trade tensions.”
China’s commerce ministry struck a relatively positive tone. “Both sides agreed that they should work together and take practical actions to create good conditions for consultations,” the ministry’s spokesman, Gao Feng said, in a weekly briefing.
“Lead negotiators from both sides had a really good phone call this morning. We’ll strive to achieve substantial progress during the 13th high-level negotiations between China and the US in early October.”Trump raised tariffs last month on imports from China worth $550bn (£446bn), escalating tensions and adding a new round of uncertainty.
The tariff rate on goods worth another $250bn will rise from 25% to 30% on 1 October. Trump imposed 15% tariffs on just under half of China’s
remaining $300bn in annual imports, including smart speakers and Bluetooth headphones, on 1 September.
The remainder will be taxed from 15 December onwards, unless a breakthrough is reached.
China has imposed retaliatory tariffs, including
levies on goods worth $75bn last month.
The trade war has raised economists’ concerns over a possible recession in the US, with market measures – including the
closely followed US government bond yield curve – signalling that a contraction could be on the way.
The tariffs already imposed and the uncertainty over the future of global trade caused by the dispute have prompted
weaker economic conditions well beyond the US and China.
Factory orders in Germany, the largest economy in Europe, slid by 2.7% month on month in July, according to the country’s federal statistical office, almost twice as fast as economists’ average expectations.
Demand for global airfreight, another indicator of economic activity, contracted by 3.2% year on year in July, the ninth consecutive decline, according to data published on Thursday by the International Air Transport Association (IATA), the global lobby group for airlines.
www.theguardian.com/business/2019/sep/05/us-and-china-agree-to-reopen-trade-talks-in-octoberThe Dow Is Up After the US and China Picked a Date to Start Trade TalksThe
Dow Jones Industrial Average looks set for a higher open after the
U.S. and China set a date to resume talks.
Dow futures have advanced 0.2%, while
S&P 500 futures have gained 0.3%, and
Nasdaq Composite futures have advanced 0.2%.
The Dow has dropped in four of the past six trading days following
yesterday’s 80 point decline, but they haven’t been big drops. In fact, the Dow is still just 1.7% away from an all-time high. And if it finishes higher today, it will have gained for two of the last three days. All of which is a long way of saying that not much is going on.
You wouldn’t know it from the headlines, however, which dwell on
impeachment and
tumbling IPOs, and suggest that, perhaps, the end of the world is at hand. And perhaps it is. But seriously, if the bull market is expiring, it will likely be because
growth has finally slowed to the point that companies can’t keep growing their earnings, and probably
not a political event.
We’ll find out more about the economy when
durable goods, PCE and consumer confidence data are released. And there’s always the hope that maybe the U.S. and China can reach a deal. “U.S./China trade talks are officially scheduled for October 10 and 11th and rhetoric from both sides remains positive ahead of the event,” writes The Sevens Report’s Tom Essaye.
“At this point, a pretty comprehensive U.S./China trade truce is fully expected by the market.”
Until then.
www.barrons.com/articles/dow-jones-industrial-average-rises-as-china-us-set-date-for-trade-talks-51569586527
