Contributor | Telegraph Local
See the New African Living Standard
Pictured above, the G20 trade summit in 2018
Wall Street’s stocks soar to record highs after the China trade deal is at last announced, citing Market Watch. S&P 500, Dow, and Nasdaq record fresh intraday records.The US-China deal sparks optimism. The future may be brighter now as the trade attrition crisis seems to have reached a compromise.
The Dow Jones Industrial Average has advanced by 178 points or 0.6%. Even with the issues Boeing presented, the blue-chip index or Dow closed gracefully. This is a first closing all-time high since November 28.
The S&P 500 rose by 28 points or 0.9%. The Nasdaq Composite Index jumped 97 points.
All main benchmark indexes set new intraday records on Monday, again citing Market Watch.
Does this mean that the trade war crisis is averted? What is happening here?
It may appear that the two economic superpowers are coming back into balance. China’s reports were mostly positive since the trade deal was announced, citing US News.
China reports that the November activity was surprisingly strong. Their industrial production rose by 6.2%, compared to a year earlier. They were up from the previous month’s 4.7%. China’s retail sales growth rose to a five-month high of 8% from October’s 7.2%, further citing US News.
The rising hike in economic favorability is partially due to the averted tariff costs. China had major tariffs scheduled to slam the US with. When the deal was reached, the tariffs were suspended. It appears that, on both sides, business resumes at a booming pace.
The question now is_will this favorability last? Or is there still tension?
At this point, it is difficult to say. Stocks have swung back from negative to positive and yet USA Today still quotes great volatility in the marketplace. USA Today has even run a recent story regarding the swing of quote, “Trump’s trade war tweets”. The article discussed protecting 401 K investments in spite of the volatile changes in the US-China trade market.
USA Today reported marketplace skepticism as this is the US-China’s Phase 1 deal. This means that, while this current uptick is positive, it may not last.
“Pandora has opened the box. Trade strife is here to stay,” says Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management_as quoted by USA Today. He continued by saying, “There’s not going to be a single document, (or) singing of a ‘Phase 1’ deal, that makes it go away.”
What exactly does the Phase 1 trade deal entail? Citing the Market Insider’s Gina Heeb, it is an 86-page text that is considered an “interim” agreement. It discusses tariff reductions, a dispute settlement mechanism, and lays the groundwork for the intellectual property processing.
Trade strife is anticipated to continue to be dicey between the US and China as Phase 2 and Phase 3 come into existence. Intellectual property infringement and Chinese currency valuation will come into play as part of the discussion. These issues are considered to be much harder to negotiate.
For now, we can enjoy this holiday season cease-fire. The stock market is sailing smoothly now. Storms will come tomorrow. Investments may crash and burn. Thus always the times.