With “Phase One” in the US-China trade agreement finally in full blow, American stock futures perked up.
US President Donald Trump described the Friday talk as “very, very good.” China’s top negotiator, Vice Premier Liu He, also hinted on making “substantial progress in many fields.”
The US will not be raising tariffs on Chinese goods. Instead, China signed to purchase large amounts of American soybeans and pork. If the bilateral trade makes no progress, the Chinese tariff will increase on October 15.
Liu He also agreed to ensure transparency in its currency policy.
DOW (INDU) and S&P 500 (SPX) both gained 0.9%, while Nasdaq (NDX) raised by 1.1%.
Meanwhile, American tech giant Apple redeemed its spot as the world’s most valuable company after it hit a record high.
Other large-cap techs Microsoft stock, Alphabet, Facebook, and Visa are near buy points.
Chinese Agri Purchases “Useless”
The Chinese are set to spend $50 billion on US agricultural goods starting on or before October 15. Economists claim the massive purchase of US agriculture is useless.
The $50 billion is double the $24 billion China spent on the goods in 2017. Some claim the announcement to spend this much is moot.
Director of Agri Commodities Strategy at Commonwealth Bank in Sydney claimed the purchase is dependent on their specific plans.
Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney, said scaling up is a “big, big ask.”
The Asian market was uneasy about the ordeal, warning investors not to get too excited.
In response, Trump said the unrest would eventually fix itself. The American president told the vice-premier that it already started to tone down since the trade war began.
Raoul Leering, head of international trade and research at ING Bank NV, warned investors not to dive in so soon. He is one of many economists who look at the agreement as “uncertain” at best.
Treasury Security Steven Mnuchin claimed the recent talk was for both countries to understand the key issues. The two sides only agreed to “make the efforts to reach a final agreement,” but specifics will come later.