Complex Made Simple

US and China enjoy a “very good weekend” amidst deflated trade-war tensions

Positive developments seem to finally being made in wake of the months-long trade war that China and the US have been waging.

Trump's tweet stated it was a "very good weekend" for the two nations Levy increase from 10% to 25% on Chinese goods has been delayed as a result Asian markets found renewed vigour in light of easing tensions

A series of tweets by US President Donald Trump has led to a worldwide sigh of relief.

In an escalating trade war that has put pressure on an already suffering global economy, Trump‘s tweets are a sign of tensions relieving between the two superpowers. Similarly positive comments from President Xi Jinping over the weekend have served to ease concern as well.

“What sounded like mission impossible a couple of months ago, now seems doable,” Hussein Sayed, Chief Market Strategist at FXTM, quipped.

So what will this mean for China and the US?

As part of Trump’s agenda of tariffs on his Asian competitor, he was supposed to enact the latest set of levies on China this Friday, March 1, which would have further escalated this bloated trade war that has been brewing for several months now. Instead, he has opted to delay them in light of the bilateral talks that took place between February 21-24 in Washington.

According to the official Chinese News Agency Xinhua, and citing the Chinese delegation, the two parties “focused their talks on the text of an agreement and achieved substantial progress on such specific issues as technology transfer, protection of intellectual property rights, non-tariff barriers, service industry, agriculture and exchange rates.”

The new set of taxation was set to increase import duties on $200 billion’s worth of Chinese goods from 10% to 25%. March 1st would’ve marked the end of a 90-day trade truce agreed upon at G20 back in December.

According to the Guardian, Trump “said on Sunday night that he would hold a summit meeting with the Chinese president Xi Jinping at his Mar-a-Lago estate in Florida to conclude an agreement, assuming both sides made additional progress.”

This fateful meeting could be one of the first true steps to finally turn the page on this troubled trade war.

Asian markets charge ahead

Image: Reuters

Following these positive comments from the leaders of China and the US, Asian markets showed renewed vigour.

“Equity markets in mainland China were the main beneficiaries of Trump’s announcement on extending the March 1 deadline,” Sayed highlighted.

CNN went to proclaim that Monday February 25th has proven the best day for the Shanghai stock market in more than three years, following renewed interest from investors.

“The benchmark Shanghai Composite (SHCOMP) leapt 5.6% on Monday, its biggest daily percentage gain since July 2015,” CNN reported, citing Reuters. “That lifted it into a bull market, which is defined as a rise of at least 20% from a recent low.”

“The closely watched CSI 300, which tracks stocks in Shanghai and Shenzhen, soared 6%,” the US site continued. “That lifted it into a bull market territory, as well. China’s main indexes had plunged into a bear market last year, a drop of at least 20% from a recent high.”

The site also commented that stock indices in Tokyo (N225) and Hong Kong (HSI) posted modest gains of less than 1%.

As for the Chinese Yuan, it strengthened by 0.4%, reaching a 7-month high, according to Sayed.