These Stocks Are Surging On The Tariff Truce

This weekend the big market news came from Argentina, where US President Donald Trump met with Chinese President Xi Jinping Saturday night.

The two leaders discussed trade policy, an important matter as the two countries – the world’s first and second largest economies – are widely seen as blundering their way into a trade war.

Following the meeting President Trump tweeted, “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.”

However, spokesmen from both governments since claimed that nothing so comprehensive was finalized. Apparently what both leaders had agreed to Saturday evening was a halt to tariff escalation and the temporary cancellation of planned increases scheduled for January 1, 2019 while trade negotiations continue for another 90 days.

According to the White House, the US and China agreed to “immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft.” This was backed up in essentials by Chinese Foreign Minister Wang Yi, who told reporters that “the principal agreement has effectively prevented further expansion of economic friction between the two countries.”

Stock Markets Rally

After word broke of the agreement between the US and Chinese leaders, market futures began surging. Current indications suggest 500+ point boost for the Dow Jones at Monday’s opening bell, and a 170-point gain for the Nasdaq.

Market performance in Asia and Europe indicates that Wall Street’s projected gains will likely materialize. Tokyo’s Nikkei 225 gained 1% for the day, while both the Hang Seng and Shanghai composite gained 2.5%. In Europe, as the trading began, the FTSE 100 was up 139 points by mid-morning Monday, while Germany’s DAX added 268 points.

Notably automotive stocks, which are sensitive to tariff barriers on both the raw material and finished product ends, led the gains.

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