Asian markets traded in the positive today, in light of recent political moves. The trade war between the US and China seems to have taken, at long last, a step towards peace. Donald Trump, the US President, has on Friday announced that the negotiations had reached a “very substantial deal,” whatever that may be.
Details are still being hammered out, but the most essential part about the deal is that US tariff increases have been halted. These tariff increases were due to be in effect this week. Donald Trump even posted a tweet about it. Trump told the reporters that this tariff also included intellectual property, agriculture purchases, and financial services that were included in this new deal they were debating.
….I agreed not to increase Tariffs from 25% to 30% on October 15th. They will remain at 25%. The relationship with China is very good. We will finish out the large Phase One part of the deal, then head directly into Phase Two. The Phase One Deal can be finalized & signed soon!
— Donald J. Trump (@realDonaldTrump) October 13, 2019
As investors celebrate this new move in the political arena, the Asian Markets make a small upturn.
The Shanghai Composite Index (SHCOMP) Drove up 1.4% after a 0.9% rise that happened on Friday. South Korea’s KOSPI jumped up the same amount, with a positive clocked on Friday too.
Even with the ongoing political turmoil, Hong Kong’s Hang Seng Index (HSI) rose up 1%. It’s more than likely that the index will extend gains from Friday, where it logged the most significant increase, day-to-day, in over a month.
The Japanese markets were, rather amusingly, closed on Monday due to a holiday.
It seems like the trading will go higher, as Trump suggested that he would meet Xi Jinping, the Chinese President, during next month’s APEC summit happening in Chile.
While not as pronounced as the Asian Market, US-based markets were seeing green as this small respite in the world-dominating trade tensions encouraged investors to try a bit harder.
The futures of Dow (INDU), Nasdaq (COMP), and S&P 500 (SPX) have all rose up around 0.3% during Monday’s Asian hours.
Just what the doctor ordered
China’s getting a good boost from this as well. Chinese trade data fell short of analyst expectations, but investors don’t seem to mind in light of the political improvements.
Monday’s data showed that exports fell 3.2% compared to last year’s same month. That’s even worse than what analysts estimated it would be. September imports didn’t do well either, with imports falling by 8.5%. This is well and truly below the 5.2% predicted by the analysts.
Martin Lynge Rasmussen, a China economist for Capital Economics, released a research note on Monday sharing his thoughts about the matter.
He estimates that exports will more than likely continue to slack in the coming months. He stated that the limited trade agreement that happened on Friday, coupled with the tariffs not going up like expected, would marginally impact export growth.
He warned that imports would probably tick up in the short term, but they’re probably not going to have as strong a rebound as expected. This would mainly be due to Domestic demand being soft.