Dow Jones rises as US and China continue trade talks
Wall Street is up after reports of a trade agreement between the US and China.
Wall Street is bullish after a hope for a resolution in the US-China trade war. The Dow Jones is up about 300 points after the news that China may purchase more US goods and the US may lift its heavy tariffs on China.
Will China end trade imbalance with US?
Investors were hopeful after reports that US Treasury Secretary, Steven Mnuchin, is in trade talks with Chinese Vice Premier, Lui He. There are reports that China will buy more imports from the US over six years. The possible trade agreement could lead to a thawing in the icy relationships between the two largest economies in the world. If the deal goes through, China would end its $323 billion trade imbalance with the US by 2014.
Will the US lift tariffs against China?
In addition to the news about China ending its trade imbalance with the US, there are reports that US President, Donald Trump, may lift its heavy tariffs on imported Chinese goods. The US has imposed $250 billion of taxes on Chinese products. If the trade talks produce reduced tariffs and increased trade, investors will be pleased, according to economist, Neil McKinnon.
‘The potential for upside surprises has receded, while downside risks have increased. Investors are still hopeful that the trade dispute can be resolved’, said McKinnon.
What's next in US-China trade talks?
While there is optimism form Wall Street about a US-China trade deal, the US State Department hasn’t confirmed any agreement.
‘Neither Secretary[Steven]Mnuchin nor Ambassador[Robert] Lighthizer have made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China. This is an ongoing process with the Chinese that is nowhere near completion,’ said a State Department spokesperson.
Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research, noted that that a trade agreement would help the Dow Jones continue to rise.
‘If we get that issue[ the US-China trade war] out of the way, which will boost business and consumer confidence, there is still plenty of room for the market to do really well,’ said Frederick.
The US stock market surged before on the strength of US-China trade talks.Investors are hopeful that this latest round of talks will continue to help Wall Street rise.
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