By CCN.com: Dow Jones Industrial Average (DJIA) futures exploded 230 points higher on Thursday as China said it wouldn’t retaliate to Donald Trump’s latest trade war threat.
Speaking to reporters, China’s Ministry of Commerce spokesperson Gao Feng said the country would look for a more diplomatic resolution to the trade war.
“China has ample means for retaliation, but thinks the question that should be discussed now is about removing the new tariffs to prevent escalation of the trade war.”
It’s the first time in the Sino-American standoff that China has not retaliated to Trump’s tariff threats.
At 5.41 am ET, Dow Jones Industrial Average (DJIA) futures leaped 233 points higher to 26,270. It marked a 0.9 percent rise in early trading.
S&P 500 futures saw a similar 0.9 percent gain, while Nasdaq Composite futures enjoyed the biggest percentage rise at 1.13 percent.
Thus far the China-American trade war has been characterized by tit-for-tat threats and countermeasures.
President Trump has routinely hit China with escalating tariffs on their exports. China has responded by halting agriculture exports, manipulating their currency, and tariffs of their own. Each time, the Dow and global stock markets took a hit.
But the latest move by Donald Trump is one step too far. Last week, Trump threatened to increase the existing 25 percent tariffs on $250 billion Chinese imports to 30 percent on October 1st. Rather than hitting back, China is now looking to come to a more peaceful conclusion.
“China is lodging solemn representations with the U.S. on the matter. Escalation of the trade war won’t benefit China, nor the U.S., nor the world” – Gao Feng.
US Treasury Secretary Steven Mnuchin also appeared to show signs of diplomacy. He confirmed that new China-US talks are in the pipeline.
“We continue to have conversations. We’re planning for them to come.”
The news is a huge sigh of relief for Wall Street as traders have grown increasingly nervous about the effect of the trade war on global markets. As CCN.com reported, Wall Street giant UBS sounded the alarm just yesterday:
“[Trade war escalations] justifies a reduction in risk in our portfolios in order to lower our exposure to an uncertain political environment.”
This morning’s relief rally showed just how much traders are watching the trade war to influence their strategy.
Last modified: June 23, 2020 2:34 PM UTC