Posted in: Market NewsPolitics
Published:
December 31, 2019 4:41 PM UTC

Trump’s Trade Deal Surprise Gave the Dow Jones a Tuesday Jolt

Minutes after Donald Trump announced he'll sign the US-China trade deal in January, the Dow opened the last trading day of the year with a bang.

  • President Donald Trump made a major announcement about the US-China trade deal.
  • He revealed the “Phase One” agreement would be signed on January 15.
  • The news gave the Dow Jones an end-of-year bounce.

Donald Trump announced he’ll be signing an official “Phase One China Trade Deal” on January 15. That put something in Wall Street’s morning coffee. His tweet ignited a swift spike in the Dow Jones Industrial Average and other major stock indices, though the caffeine rush didn’t last.

Source: Twitter

The president says the signing will take place at the White House with high-level representatives from China. He’ll be traveling to Beijing at a later date to commence “Phase Two” trade negotiations.

Trump Tweet Triggers Dow Jones Bounce

The Dow spiked 60 points just minutes after Trump announced the date of the trade deal signing ceremony. | Source: Yahoo Finance

Trump’s announcement ends weeks of investor speculation and hopeful trepidation. The stock market charted an exuberant rally lasting through the holidays following the president’s Oct. 11 announcement that the US and China were nearing a trade agreement.

The Dow Jones Industrial Average added over 1,600 points to its benchmark index by New Year’s Eve after the initial Phase One announcement delayed tariff hikes.

At the time, Trump said the agreement would take weeks to put into writing, but he claimed the signing ceremony would occur in November. By December, the signed agreement had yet to materialize. The rally continued anyway, as markets got a massive lift out of holiday sales, despite the stalling trade talks.

But stock benchmarks began to slip as the new decade approached over fears of overvaluation, as well as the ongoing delay in signing the Phase One agreement.

This morning’s progress with China put some pep in the Dow’s step out of the gate. But heading toward afternoon trading, it looks like the market pullback might continue. As of 11:36 am ET, the Dow had lost 64.41 points or 0.23% to settle at 28,397.73.

What’s in The Phase One Trade Deal?

Speculation about the trade deal raged in the final days of 2019.

On Monday, the South China Morning Post cited an unnamed source saying the trade deal would be signed this week. The source claimed that China’s lead negotiator, Vice-Premier Liu He, would lead Beijing’s delegation to sign the deal on Saturday.

The same day, White House trade adviser Peter Navarro told Fox News that the deal would probably be signed in “the next week or so.” But he also cautioned viewers not to trust anonymous sources:

Never believe reports on anonymous sources. Get it from President Trump or… [US Trade Representative] Robert Lighthizer

The final Phase One trade deal will reportedly include Chinese commitments to purchase $40 billion to $50 billion in US farm products annually. It will also address how China manages its currency, the renminbi.

This article was edited by Josiah Wilmoth.

W. E. Messamore @thehuli

Markets Contributor for CCN living in Nashville, Tennessee. Bachelor of Business Administration from Belmont University in 2009 (majored in Entrepreneurship). Organized Senator Rand Paul's first and second online fundraisers in 2009. Correctly predicted the bitcoin bull market of 2019. Roving editor for the Independent Voter Network since 2013. Email me | Follow Me on Twitter (followed by: fmr Rep. Ron Paul (R-TX), Sen. Rand Paul (R-KY), fmr NM Gov. Gary Johnson, and Rep. Thomas Massie (R-KY))