The Dow roared back to life on Wednesday, jumping 171 points at the stock market open. It comes after a breaking Bloomberg Terminal report revealed that China and the US are moving closer to an agreement on tariff rollbacks. Sources claim that Trump’s throwaway comment about delaying the deal yesterday doesn’t reflect the true progress of the deal.
“The people, who asked not to be identified, said that US President Donald Trump’s comments Tuesday downplaying the urgency of a deal shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff.”
The news comes as a relief to traders after two days of heavy selling pressure which saw the Dow shed as much as 450 points in a matter of hours yesterday.
Rolling back Trump’s tariffs on $550 billion on Chinese exports has been a sticking point in the ongoing trade negotiations. While China sees a rollback as necessary part of any agreement, the Trump administration feels otherwise. Earlier in November, Trump confirmed:
They’d like to have a rollback… not a complete rollback because they know I won’t do it.
Today’s Bloomberg report claims that progress is still ongoing and a compromise may be close. Despite that, many roadblocks remain. The US has angered China in the last week by signing laws that cracks down on human rights issues in Hong Kong and Xinjiang where one million muslims are held in re-education camps.
The news will come as something of a surprise to traders. Yesterday Trump rocked the markets by hinting at a delayed deal. Speaking to reporters while visiting the UK, he said he may wait until after the 2020 election to conduce the trade deal with China.
Commerce Secretary Wilbur Ross doubled down on the message, claiming that postponing the deal would give the president a stronger position from which to leverage a deal.
The flip-flop messaging from the White House has brought intense volatility to the stock market. And it hasn’t gone un-noticed by Chinese press. Global Times editor Hu Xiin said this morning:
I predict there is a high probability that President Trump or a senior US official will openly say in a few hours that China-US trade talks have made a big progress in order to pump up the US stock markets. They’ve been doing this a lot.
His prediction couldn’t have been more accurate.
Last modified: June 14, 2020 9:52 AM UTC