• 4 hours Buffett, Dimon Voice Support For Stock Buybacks
  • 10 hours Newmont Goldcorp Now World's Top Miner After Sealing The Deal
  • 1 day Canopy Growth Eyes U.S. Pot Producer In $3.4B Takeover Deal
  • 1 day U.S. Slaps New Sanctions On Cuba To End ‘Glamorization Of Communism’
  • 1 day The Unstoppable Electric Bus Revolution
  • 2 days Pinterest, Zoom Launch Much Anticipated IPOs
  • 2 days Marijuana’s Bizarre Bottleneck Isn’t What You’d Expect
  • 2 days Climbing Stocks Weigh On Gold, But A Turnaround May Be Near
  • 2 days China's Economic Growth Exceeds Analyst Expectations
  • 3 days Gold Prices Fall On Record Global Production Estimates
  • 3 days Can Meditation Make A Business More Profitable?
  • 3 days America’s Biggest And Most Profitable Actually Got Tax Rebates
  • 3 days Central Bank Gold-Buying Is Chipping Away At The Dollar
  • 4 days The Three Assets That Outperformed The S&P Over 20 Years
  • 4 days Inside China’s Renewed War To Purge the Internet
  • 4 days Trump Blames Fed For 10,000-Point Stock Market Loss
  • 4 days Musk Draws SEC Attention With Another Controversial Tweet
  • 5 days The Overlooked Factor Contributing To Inflation
  • 5 days Does Capitalism Need An Upgrade?
  • 5 days Next Major Stock Market Selloff Could Spark A Bull Run For Gold
  1. Home
  2. Investing
  3. Stocks

Traders Euphoric After “Extraordinary” G20 Meeting

Dow

The G20 went off better than most expected, with Trump reportedly playing an innocuous role as an actual diplomat; but the coup de grace for the equities market was some breathing space from the trade war as China and the U.S. declared a 90-day truce from the tariff conflict.

The Dow is loving the holiday largesse, jumping 400 points in the premarket and opened 345 higher on news of the 90-day truce agreed by Trump and Chinese President Xi Jinping at the G20 on Saturday.

(Click to enlarge)

In the pre-market, the S&P 500 was up 1.44 percent, and the Nasdaq jumped 1.87 percent.

Trump had been threatening to increase the 10-percent tariff on $200 billion in Chinese goods to 25 percent as of the first of the New Year, but a three-month postponement is now on the books to give the two sides time to talk.

The ceasefire was made possible after China agreed to buy more American farm and industrial products, and to sit down at the negotiating table over the highly sensitive issues of intellectual property theft, force technology transfers and cybersecurity. 

Trump called the meeting with Xi “extraordinary”, and the markets agreed wholeheartedly.

(Click to enlarge)

The biggest sigh of relief probably came from Apple, which was trading up nearly 1.6 percent right after market open Monday.

(Click to enlarge)

For Apple, it’s been a dark week—if not a dark several months after making the trillion-dollar club earlier this year. The specter of another round of tariffs that would target the iPhone had wreaked havoc on the stock earlier this month, prompting talk of having to do the impossible: bring production home.

Nor is Apple the only one feeling like Christmas might come after all. The White House also said that China was “open to approving the previously unapproved” $44-billion deal for Qualcomm to acquire chipmaker NXP if it came up again. Qualcomm tried to buy NXP this summer, but Chinese regulators quashed the deal. For now, though, Qualcomm isn’t biting. It told Reuters it wasn’t planning to make another go of it. Related: Tesla’s Chinese Sales Are Plummeting

American soybean farmers will also be rejoicing, with soybean prices surging Monday on the news, with January futures contracts gaining 1.9 percent at the Chicago Mercantile Exchange.

(Click to enlarge)

Source: CNBC

"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. China has agreed to start purchasing agricultural product from our farmers immediately," the White House said in a statement.

It might not be enough to save farmers facing bankruptcy over 25-percent tariffs that have locked them out of the Chinese market, but it’s better than nothing, and Trump is promising quick benefits.

(Click to enlarge)

So, what comes next? That’s anyone’s guess. If no new deals are reached during negotiations over the next 90 days, then we’re back at square one, and facing another round of tariffs that would include pretty much everything made in China.

For now, the markets are surging in optimism, but they should also be recalling what happened in May, when a similar truce was announced by US Treasury Secretary Steven Mnuchin, who said at the time that the trade war had been “put on hold”. A few weeks later, it was a roaring beast, once again.

Any optimism right now will necessarily be cautious.

By Fred Dunkley for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment