Investors have positively received reconciliation in commercial negotiations between the United States and China during the weekend, which aims to reduce the trade war between the world’s largest economists and waste part of the uncertainty that affected the financial markets. However, few expect a penetration currently.
Both sides declined to detail the negotiations, saying that more information will be issued on Monday (12). However, US Treasury Secretary Scott Beesen and Trade Representative Jameson Jarir said on Sunday that an agreement was reached with China to reduce the US trade deficit.
The Chinese deputy described Living, who met his American counterpart in Geneva, the meeting as “Franco” and the first important step.
“This is a step in the right direction, explaining that both parties are interested in reaching the conclusion of building and developing a better business relationship,” said Eric Kobe, North Star Investment Company in Chicago.
“The details are still very vacant, but I think the trend seems to be more cooperative than fighting, and we must see it is a positive thing.”
The meeting in Geneva can define one of the largest developments since US President Donald Trump launched a comprehensive tariff on April 2, which caused chaos in the global trade scenario and generating severe fluctuations in the market.
“I am happy that we have made great progress between the United States and China in very important commercial negotiations,” Pesin told reporters earlier.
Trump said on Saturday, after the first day of the negotiations, that the two countries had negotiated “completely restarting … in a friendly but constructive way.”
He added that “great progress” was made, but without going into the details.
Investors recently showed that the worst commercial scenarios will not be achieved, noting the signs of frustration in tensions between the United States and China as one of the reasons for recovering procedures.
“The markets can be encouraged by some agreement on a possible agreement, but it depends on the additional details that will be revealed,” said Gennadi Goldberg, head of the USA rate strategy in New York.
“The last basic measure indicates some optimism about a commercial agreement. If this is confirmed, prices have been justified. The risks are whether the agreement is less fundamental than expected. In this case, the market may be disappointed.”
In fact, despite Trump’s comments to negotiations that indicate a decrease in Chinese definitions, and a trade agreement announced on Thursday between the United States and the United Kingdom, many market participants said they do not expect significant progress in the negotiations.
“We are still skeptical that direct negotiations between the United States and China will lead to” great commitment, “said Thierry Weizman, a global strategic expert in FX and Macquarie rates, in a note for customers.
An immediate agreement seen as unlikely
Both the United States and China may want to reach an agreement. However, at this early stage, there appears to be a simple incentive to do so quickly.
Ren said: “Everyone still wants to see how the other deals with the winds of a violation,” Ren said.
“At the present time, the market may be very optimistic about what China and the United States can reach and the speed that the events will happen,” he added.
Trade tensions between the two countries increased last month, when the United States increased the customs tariffs on all Chinese imports to 145 % impressive, then China raised American imports to 125 %.
On Friday, Trump comments that the 80 % rate of Chinese goods “seems correct”-which makes his first proposal with a specific alternative to 145 % of the tariff that some hope of progress in resolving the conflict.
The S& P 500 index has already deleted the large losses that were observed immediately after the announcement of the customs tariff on April 2, although companies continue to alert investors about the impact of the definitions and uncertainty they generate, in profit -related comments.
S&P 500 is still less than 8 % less than its historical record in February and about 4 % a year.
Amid the chaos of customs tariffs, weak research to search for consumer, and other “weak” data, concerns about the growth of the United States increased, although most economic data indicated flexibility in the economy.
Converting attention to market fluctuations
Volatility, in turn, still exists. The CBOE fluctuations index (Vix), which is the invested anxiety options scale, remained around 22 on Friday without its last peak at 52.33 in April, but still higher than the long -term medium of 17.6.
Ren said of wisdom, that one of the factors that have limited this volatility so far was the high cost of setting short positions, and betting on the future market declines.
Ren said: “When an individual (published on social networks) can make the market move by 10 %, it makes it very expensive,” to create these situations. The procedures launched on April 9 were launched, after Trump suspended many heavier prices for 90 days.
However, the markets have been prepared for more fluctuations, said Matt Jerten, head of the BCA geopolitical strategy, a total economy research company.
Gerten said the company’s best advice is “selling it when unloading.”
Andrew Matok, Matthews Asia’s wallet manager, said any sign of progress in initial discussions will be welcome, allowing China to focus more on its local economic problems.
He warned, “Talking about any other scenario is to end the loss of both parties.”
The most difficult negotiation agreement
Despite the relatively rapid agreement with the United Kingdom, Claudio Irigwne, the chief global economic research of Bofa Securities, warned that other agreements would be difficult to conclude, and that China is the most complex.
“I can see work agreements with India and Japan, and perhaps South Korea in the future,” he said. “China – this is the most complex and will be the last to be done,” partly because the geopolitical relationship is intertwined with trade relations.
Investors are concerned that negative scenarios were not taken into account in asset prices, and many markets most likely said that the market will be satisfied with the modest signals of progress.
“We do not need a small conversation,” said Jerkin.
