A US-China trade ceasefire will not make investors wise
Saqib Iqbal Ahmed and Ankur Banerjee
NEW YORK/SINGAPORE (Reuters) – The latest trade ceasefire between China and the US hopes investors can reach lasting solutions and prevent further market disruptions, but the lack of detailed terminology leaves room for the possibility of future tariff disputes.
President Donald Trump said on Wednesday that the US contract with China will end, supplying Beijing with magnets and rare earth minerals, and that Washington will allow Chinese students at US universities.
China’s deputy commerce minister Li Chenggang said on Tuesday that China and the US negotiating teams agreed to a trade framework after two days of talks and returned it to leadership.
White House officials said the agreement allows the US to charge 55% tariffs on imported Chinese products.
Wall Street stocks were bordered and the dollars slipped. The Chinese stocks were inched up to nearly three weeks.
Security responses from currency and stock investors showed that the market was expecting more while the meeting ended with an armistice. The lack of details means that uncertainty is likely to remain high.
“Details are lacking and both sides claim that their needs have been met…but this issue is not close to being resolved,” said Chris Grissanti, chief market strategist at My Capital Management.
The main positive point was the speeches showing pragmatism on both sides, analysts said. The outcome of the consultation supported high-risk assets, but investors appeared to remain vigilant.
“The devil is in detail… other big news seems to have a framework for further discussion, which contradicts the statement “It’s a completed transaction,” said Oliver Seung-che, senior vice president of Wells Spear Advisors in New York.
Investors remain cautious as Trump’s July 8 deadline for a 90-day suspension on tariffs in the approach of other US trading partners.
The markets plunged after Trump’s “liberation day” tariff announcement on April 2 as investors worried about an imminent recession, but those fears eased as Trump rewind most of the punitive tariffs.
The Benchmark S&P 500 Index is up more than 20% from its April low, approaching a recovery of record highs. Chinese stocks performed poorly as investors worry about a sustainedly weak economy, but still regained losses to return to April 2nd levels.
Customs Deferral
U.S. Secretary of Commerce Howard Lutnick said the latest plan to chop up the “meat” of the contract reached in Geneva last month has reached in Geneva to ease bilateral retaliatory tariffs that have reached triple-girder grinding levels.