Futures on the Dow Jones Industrial Average (DJIA) are soaring early Friday as a U.S.-China trade pact seems to be a done deal , setting the stock market on course for a strong end to the week. President Donald Trump has reportedly offered Beijing eye-watering concessions to bring an end to the protracted trade war that has been going on for nearly 17 months.
Citing two people familiar with the trade talks between the U.S. and China, Reuters reports that Trump has offered to slash existing tariffs to the tune of 50 percent on goods worth $375 billion. This is in addition to suspending tariffs on $160 billion worth of goods that were originally expected to come into force on Dec. 15.
The Dow has surged in anticipation and the stock market could set new records today. Of course, there is speculation that the Dow might be over-reacting as Beijing has maintained radio silence so far. But don’t be surprised to see a deal actually getting through just in time before the Dec. 15 deadline as the concessions that Trump is reportedly offering could be enough to bring China around.
Dow Jones futures are up 163 points, or 0.58 percent, at 5.34 am ET. This paves the way for the Dow to finish the week on the front foot after yesterday’s massive rally.
S&P 500 futures are also showing signs of strength, up by 17 points, or 0.53 percent. Nasdaq Composite futures are up 0.65 percent, or 55 points.
There has been no official statement from either side about a trade deal being reached, but it seems like a formality. President Trump has already indicated that both the U.S. and China want a trade deal, so they might be waiting to make a joint statement.
From Beijing’s side, the comments made so far have been measured. Daily News quotes a Chinese foreign ministry spokeswoman as saying:
On Friday, a Chinese foreign ministry spokeswoman said a negotiated settlement is the “expectation of the international community” but gave no confirmation of an agreement or details on the status of talks.
“Negotiations must be based on the principles of equality and mutual respect,” said the spokeswoman, Hua Chunying, repeating Beijing’s long-held position. “The deal must be mutually beneficial, a win-win.
Still, the Dow has soared in anticipation that the deal will go through. And that might just be the case considering the reported concessions Trump and the White House are willing to offer. In return, China is expected to buy $50 billion worth of farm goods from the U.S. and also open its services markets to foreign companies.
So, once an official confirmation arrives from the two sides, expect the Dow Jones to fly higher today.