Analysts predict a short-term sentiment boost to the markets, but they also fear 90 days may not be enough to resolve all underlying differences for a deal
Asian markets, the first to begin trading after the leaders of the world’s two biggest economies agreed to halt escalating their trade war over the weekend, are likely to rise in relief on Monday, but analysts fear 90 days may not be enough for Beijing to solve the underlying structural issues to the satisfaction of the US.
The US and China reached a 90-day ceasefire in their trade war on Saturday after a dinner meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires.
“The markets will be elated,” said Aninda Mitra, senior sovereign analyst at BNY Mellon Investment Management. “I see this is as a short-term risk positive development and safe havens should underperform in coming days. The interlude should see a stronger effort to set a framework for more talks and quid pro quos.”
Ahead of the G20, the US had planned to raise tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent from January 1. But the increase has now been put off.
In return, China has agreed to a number of concessions. It will buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial and other products” from the US to reduce America’s huge deficit with China, according to a statement by the White House.
“All in all, a slightly better outcome than expected in my view,” said Stephen Innes, head of trading for Asia-Pacific at Oanda.
