The main news that hit the wires yesterday before the European close, was that the US and China trade-talk representatives have agreed on more talks in the near future and that there would be a delay on certain tariffs. UK will provide with their YoY and MoM inflation numbers for the month of July. Both figures are believed to have slid a bit.
US Delays Tariffs On Chinese Electronic Goods
The main news that hit the wires yesterday before the European close, was that the US and China trade-talk representatives have agreed on more talks in the near future and that there would be a delay on certain tariffs. The news comes after China’s Liu He discussed over the phone the current trade war situation with his US counterparts, Lighthizer and Mnuchin. It is believed that China has agreed to purchase more agricultural products from the US in exchange to US delaying their tariffs on a few Chinese goods until mid-December. The main Chinese imports into the US that fall under those exclusions are electronic devices. And that is understandable, as companies start to get ready for the Christmas and New Year festive season, where electronic goods are always in high demand.
The market took the news in a very positive way, straight away switching from a risk-off to a risk-on mode. After the US opening bell, all the major indices moved up, as investors started dumping safe-haven assets and jumping back into equities. This resulted in gold dropping back to the psychological 1500 area and currencies like the yen and the Swiss franc depreciating against their major counterparts. Certainly, all this looks good for now, but we need to let the market digest everything, as the trade war did not disappear anywhere. It still remains in play, as China and the US continue to disagree on a range of issues and yesterday’s positive remarks from the phone negotiations could eventually fade away in the medium term. We will definitely enjoy this bounce in equities and the positive news from the trade negotiations of the two major economical giants, but...
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