Tension in the US and China trade war is decreasing; Stock market has jumped due to a new beginning in the relationship
US-China Trade: The relationship between the US and China has started to improve. The reduction in trade tax has given relief to the market. At the same time, the hopes of investors have increased, but a permanent solution is still far away.
The tension in the trade war that has been going on between the US and China appears to have eased now. Trump, the US President, has declared a 'brand new beginning' for the two nations' relations. There was a huge spike in the leading stock market indexes of Wall Street immediately after this.
Great rise in the stock market:
- Dow Jones Industrial Average: Closed at 42,410.10 with a jump of 2.8 percent.
- S&P 500: Closed at 5,844.19, up 3.3%.
- Nasdaq Composite: Reached 18,708.34 with a strong jump of 4.4%.
- This boom came because investors hope that the ongoing trade tension between the US and China can now gradually end.
There was last week a meeting of high-ranking officials from the US and China in Switzerland. The outcome of the meeting was that the US is now going to collect just 30 percent tax from Chinese goods rather than the hefty tax of 145 percent. Simultaneously, for American goods, the tax imposed by China is going to decrease from 125 percent to 10 percent. It is a short-term concession, but the move is being taken seriously to ease the trade war.
Last week, a positive agreement was also reached between the US and Britain regarding trade. Experts say that these two big announcements will increase the confidence of companies, and they will be able to make plans related to future investment and expenditure. Briefing.com wrote: 'These decisions will make traders feel that a permanent agreement will be reached in the future, so that they will not hesitate in taking decisions related to their investment and expenditure.'
ABBW expert Karl Helling said, 'Many details are still to be decided. It is clear that a long way has to be covered for a real and permanent agreement.' That is, even though this agreement is relief news for the market, it is not final. There is still a need for negotiation and agreement on many issues.
Now the market's eyes are fixed on the US inflation (CPI) data coming on Tuesday. These figures will be for the month of April. Experts would like to see how much the taxes (tariffs) imposed due to the trade war affected the expenditure of common people and inflation. If inflation increases, it will indicate that the burden of tax has reached the consumers. If inflation remains under control, it will be even better news for the market.
