Trump and Jinping Met: How US Markets Might React

Trump and Jinping met

On the sidelines of the G20 Summit in Argentina last week, American President Donald Trump and Chinese President Xi Jinping met to discuss issues related to US-China trade disputes. In this series, we’ll find out how US markets moved after discussions between the leaders of the two largest economies in the world.

Trump and Jinping Met: How US Markets Might React

What’s the outcome?

According to a statement released by the White House late on Saturday, “President Trump has agreed that on January 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time.” The statement also said that “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries.”

However, this seemingly positive outcome also has a condition attached to it. In the next 90 days US and China will continue to negotiate on a variety of issues, and if no agreement is reached by the end of this period, the US will raise tariffs from 10% to 25%, the White House statement further suggested.

While this news should please equities investors (QQQ), it may continue to keep markets highly volatile in the coming months as US-China trade negotiation continues.

In November, the US-China trade war kept US equities mixed to negative. While the S&P 500 Index rose 1.8% last month, the NASDAQ Composite Index ended the month with a 0.3% decline. Apple (AAPL), Ford (F), General Motors (GM), and Tesla (TSLA) yielded -18.4%, -1.5%, 3.5%, and 3.9% returns in November, respectively.

In the next parts, we’ll discuss what a US-China ceasefire could mean for the auto industry.