Stockmarkets keep a beady eye on Donald Trump. But he is also "sensitive" to them, says Pete Sweeney on Breakingviews. December's market wobbles have prompted the president to seek a "quick-and-dirty settlement" in the trade war with China. Trump has announced that he will postpone an increase in tariffs on $200bn of Chinese goods set for 1 March.
He said there had been "substantial progress" in trade talks. The US might also drop criminal charges against Huawei (for violating US sanctions on Iran and stealing US technology) as part of a trade deal, says The Wall Street Journal. In return, China could agree to buy large amounts of US products, such as soybeans.Chinese stocks surged following the announcement, with the CSI 300 index risingto its highest level sinceJuly. The S&P is up 11% so far this year. The CSI 300 shed a third of its value as trade tension worsened.
There may well be further gains ahead, even if optimism on the trade front is overdone. The latest data coming from China suggests that credit growth may be accelerating again, and this is positive for equities. Many other emerging markets "are largely a derivative play on China, and if China picks up they should too", says Gavekal Research; especially since "emerging markets' national balance sheets are strong and currencies started the year attractively valued".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Why undersea cables are under threat – and how to protect themUndersea cables power the internet and are vital to modern economies. They are now vulnerable
