The Dow Futures indicate a powerful opening for the Dow Jones with a 74-point increase as U.S. President Donald Trump said he would consider establishing a partial trade deal with China.
Prior to his visit to a congressional Republican retreat in Baltimore, President Trump said that an interim trade deal with China could be the next step, working towards a comprehensive deal.
“If we’re going to do the deal, let’s get it done. A lot of people are talking about it, I see a lot of analysts are saying an interim deal — meaning we’ll do pieces of it, the easy ones first. But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider, I guess,” said President Trump.
The Dow Jones, which has increased by nearly 600 points since mid-August, is moving towards its record high achieved in mid-July fueled by aftermarket trading as seen in the performance of the Dow Futures.
Strategists expected trade deal progress, leading to inevitable Dow Jones surge
In recent weeks, the sentiment around the trade talks has noticeably improved and the change in the direction of the talks has been reflected by the Dow Jones and other major stock market indices.
After President Trump delayed the imposition of new tariffs on China in a rare “gesture of goodwill” at the request of Chinese Vice Premier Liu He, analysts considered to insiders covering trade talks in China including Hu Xijin said that progress is being made by both sides.
“Welcome this decision. It should be seen as a goodwill gesture the US side made for creating good vibes for the trade talks scheduled in early October. Yesterday China announced to remove 16 categories of US products from tariff list. Hope reciprocity of goodwill can continue,” said Xijin.
He added that the Chinese government has started to encourage local companies to buy certain amounts of farm products from the U.S., easing the tense dispute between the two economies.
“Based on what I know, Chinese govt encourages Chinese companies to buy certain amount of US farm products, including soybeans and pork, which will also be exempted from additional tariffs. It is hoped the US side can keep goodwill reciprocity with China through practical actions.”
The Dow Jones and the rest of the U.S. equities market were already on an upward trend following the release of the August jobs report and other strong fundamental indicators of the U.S. economy.
More progress on the trade talks and the willingness of both the U.S. and China is expected to further strengthen the momentum of the Dow Jones.
Gao Feng, a spokesman for China’s commerce ministry, said:
“We hope that China and the US can continue to meet each other half way and take practical steps to create a good environment for talks.”
With both countries gearing towards partial deals in anticipation of the next round of trade talks in October, analysts expect some sort of a deal to be made in the short term.
Last modified: September 23, 2020 1:01 PM