U.S. AND CHINA AGREE TO LIFT PREVIOUSLY IMPOSED TARIFFS.

On Thursday, the Chinese Ministry of Commerce announced that it had reached agreements with the United States to lift previously imposed trade restrictions. According to a representative of the Ministry of Commerce - Gao Feng, if the trade agreement is signed, the countries should simultaneously and proportionally abolish the previously introduced tariffs. This condition is part of the interim agreement. "The trade war began with the increase of tariffs and should end with the abolition of these tariffs," Gao Feng said. At the same time, he noted that the parties had not yet agreed on the country and the date of signing the agreement.

Earlier, Reuters reported that Donald Trump and Xi Jinping may sign a trade agreement in London on December 3-4, not the NATO summit. But the final decision on this matter has not yet been made.

HOW WILL THE NEWS OF THE TRADE AGREEMENT AFFECT THE FINANCIAL MARKETS?


Stock market

The main beneficiary of the possible signing of a trade agreement between the U.S. and China will be the stock market. Over the past year and a half, stock indices have been heavily dependent on news related to international trade. The conflict between the U.S. and China has had a strong negative impact on the growth rate of the global economy. In order to maintain economic activity, the world's major central banks resumed the softening of the monetary policy cycle. Investors hope that the signing of the first part of the foreign trade agreement between Beijing and Washington will contribute to the improvement of the situation in international trade and recovery of the previous growth rates of the global economy.


Oil market

All commodities are very dependent on international trade news. The trade conflict has become the main reason for the slowdown in global economic growth and a decline in energy demand. According to the latest reports, OPEC countries do not want to further cut production quotas, so the hope of investors for the recovery of oil prices are linked to the improvement of international trade and the growth in demand for oil.


Precious and non-ferrous metals market

The precious and non-ferrous metals market is also strongly influenced by international trade news. China remains the largest consumer of non-ferrous metals. For example, China accounts for about 45 % of global copper consumption. The signing of the agreement will contribute to the recovery of China's economy, as well as to the growth of demand for metals and increase in their value.

Many investors regarded gold as the main protective asset against foreign trade risks, so any reports of progress in negotiations between the U.S. and China will significantly reduce the demand for precious metals. If the agreement is signed, the gold chart may finally form a medium-term reversal model, in which the price may fall to $1400 per ounce.


Currency market

The currency market is also closely following the progress of trade negotiations between the U.S. and China. In this case, the U.S. dollar and the Japanese yen are the first to be singled out. Both currencies were previously considered by investors as protective assets in case of aggravation of trade risks. In case of signing the agreement both currencies will be under certain pressure. The currencies of developing countries, which have been seriously affected by the trade conflict of the world's largest economies, will be the winners.