Trade Talks On The Radar
Trade talks between the US and China have gained a new lease of life this week, and the equity markets have been loving it! Is it time to pop the champagne?
Well, maybe not just yet, but it looks like the time may be coming sooner than the skeptics think. China’s VP, Liu He, and a squad of top-flite Chinese officials will be arriving in Washington today to hopefully hash out the few niggles left between the two bickering superpowers. Fingers crossed.
Reports suggest that many of the major issues have been resolved, making it only a matter of time before some form of official document is produced and (hopefully) signed by both parties. The optimism has been palpable in the markets this week with both Asian and US equities bumping up a few notches since Monday.
Risk appetite has taken a noticeable upturn with safe-havens like gold and treasury prices sliding, while equities and other more volatile asset classes benefited from the shift in sentiment. These latest positive developments have helped the S&P 500 brush off the weak economic data and flagging momentum from the previous week to drive yet another leg of the epic bull market that has been in charge since the start of 2019.
Investors will be feeling optimistic about US equities in the face of an upcoming trade deal, however, the ever-present spectre of the global slowdown is not something to be ignored. A trade deal will provide an excellent medium-term boost for markets, but the longer term picture laid out by the Fed and other global central banks shows a slightly gloomier outlook. Only time will tell.