Futures Surge, China May Accept Interim Trade Deal, Don’t Expect The Trade War To End

The U.S. futures surge after reports China is willing to accept an interim trade deal if no more tariffs are imposed.
Thomas Hughes

The U.S Futures Are Up Sharply In Early Trading

The U.S. futures are up sharply in early trading. Reports from China suggest an interim trade-deal may be at hand. According to separate reports citing an unnamed official China is prepared to accept a partial deal. Their terms are if the U.S does not impose any more tariffs. The reports go on to say China will concede non-core issues but won’t budge on major sticking points.

Chinese officials are said to have “no optimism” regarding a broad trade deal or an end to the trade war. At best, traders can expect a new status quo to be put in place and for economic slowness while businesses adjust. The key takeaway is, however, that a measure of uncertainty may be removed from the market allowing economic expansion to resume.

The NASDAQ Composite is in the lead with a gain of 1.0% in early trading. Shares of Apple’s supply chain are, however, mixed in the premarket session. The S&P 500 is in second place with an advance of 0.90% while the Dow Jones Industrials are up about 0.75%. Later in the session traders will be on the lookout for the JOLTs report and Wholesale Trade at 10 AM.

Europe Up, Brexit Deal Is Still Elusive

European markets are up on trade hope despite the elusiveness of a satisfactory Brexit deal. In the latest news, PM Boris Johnson is facing mutiny from within his own party as the odds of a hard-Brexit increase. An offer from the EU to allow associated parties to exit the Irish-Backstop after a few years was rejected. The rejection by Northern Ireland is understandable but adds to frustrations. Both Johnson and his Irish counterpart have reiterated their desire for a deal.

In stock new, shares of GVC are up nearly 5% after the company increased its earnings guidance for the second time in three months. In other news, markets are expecting another rate cut from the FOMC after a speech by Jerome Powell on Tuesday. Powell says the Fed is prepared to act as necessary and may begin increasing the balance sheet again soon.

Asia Mixed Amid Growing Trade Uncertainty

Asian markets closed the day mixed because the session ended before the reports of China accepting an interim deal hit the wires. Traders in the region are concerned trade relations will not improve due to the U.S. blacklisting of 28 more companies and visa restrictions on official envoys. The U.S. move is in response to China’s alleged human rights violations targeting ethnic Muslims. This move is a counterpoint to China’s harsh backlash against the NBA for supporting the protests in Hong Kong.

The Nikkei is down about -0.60% on weakness in Tencent. The Shanghai advanced 0.39%. The Hang Seng shed -0.81% while the ASX fell -0.71%. The Korean Kospi led today’s session with a gain of 1.21%.

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