Investors turn risk on
By Vincent-Frédéric Mivelaz
One day after President Trump’s threat to hike tariffs, White House economic adviser Larry Kudlow reversed the outlook. Kudlow said that Trump and Chinese President Xi Jinping would have constructive discussions and reach an agreement when they meet in a few days at the G20 conference in Argentina. We remain doubtful. Although negotiations started a few weeks ago, we don’t expect a rapid conclusion, but perhaps a postponement of 25% tariffs on USD 200 billion of Chinese imports.
US equities liked the news, bouncing into positive territory at closing despite a start in the red yesterday. The Dow Jones Industrial Average index closed at +0.44% while the S&P 500 and tech NASDAQ indexes closed at +0.33% and +0.01%. Asian indexes followed the same trend, with the Japanese Nikkei 225 +1.02%, Hong Kong Hang Seng +1.33% and China’s mainland CSI 300 +1.33%, its highest close since 2 November (+3.56%). Investors are turning more optimistic. The USD also gained strength, with the dollar index at 97.51 (+0.15%). USD/CNY is higher, gaining +0.20% since yesterday. Today’s fixing at 6.95 (prior: 6.9463) suggests further pressure on both CNY and CNH.