Momentum ETFs In Focus On Trade Deal Optimism

Given the growing concerns over slowing economic growth, a trade deal between the two largest economies is what the market needs now. Spreading optimism, President Trump tweeted that the trade negotiations with Beijing are progressing well. He also mentioned his plans to meet the Chinese Vice Premier Liu He on Oct 11. These tweets received a positive response from the stock markets. Major U.S. stock indices closed around 0.6% higher following the tweets.

The timing of this meeting is also crucial. Notably, Trump had postponed the planned tariff increase of 5% on $250 billion of Chinese goods from Oct 1 to Oct 15 as “a gesture of goodwill.” Thus, it is believed if the trade talks fail, Trump might levy additional tariffs (read: 4 ETFs to Play the Key Events in Q4).

However, the week had started on a relatively disappointing note with Trump administration’s move to ban some of China’s top AI startups. The new list includes around 20 Chinese public security bureaus. Moreover, eight companies, including video surveillance firm Hikvision, along with prominent facial recognition technology companies like SenseTime Group Ltd and Megvii Technology Ltd have been blacklisted (read: Chip ETFs in Focus as Trump Blacklists More Chinese Tech Firms).

Momentum ETFs in Focus

While the broader stock market is expected to move higher on positive developments in trade talks, momentum investing will likely take charge as investors seek greater returns in the short term. Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Also, per a Bloomberg report, the momentum funds have staged a rapid comeback following the sell-off in September. As such, we have presented five ETFs that could outperform on positive trade talks news. Further, these could beat broader market returns in the coming months if the positivity prevails.

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