And…We’re Back to China
After a week of focusing their attention on the tensions between the United States and Iran, traders and analysts around the world have shifted their attention back to the trade war between the U.S. and China, and “phase 1” of the trade deal that is expected to be signed on January 15.
The trade tensions have been making headlines for months and have increased volatility lately in both stock and currency markets. According to Reuters, approximately 200 people have been invited to Washington for the signing of phase 1 of the trade deal, though the details of the deal have not been made public, sparking concern that the deal may still unravel. According to preliminary reports, China has committed to purchasing $200 billion in goods and services from the U.S., but since China has remained quiet on the issue, analysts are concerned that such a hefty purchase may not be realized. Further, Washington has reserved the right to bring back cancelled tariffs if China does not abide by the terms of the agreement, a move which could, based on President Trump’s penchant for swift action, be triggered easily and have severe repercussions on the countries’ relations and the global economy.
Asian markets were trading mostly higher on Monday afternoon as traders opted to remain positive about the upcoming signing. Hong Kong’s Hang Seng Index had jumped 1.08 percent as of 3:08 p.m. HK/SIN, and South Korea’s Kospi was up 1.04 percent. Japan’s Nikkei was up 0.47 percent, and both of China’s benchmark indexes were higher. Only Australia’s ASX 200 was trading lower, down 0.37 percent.
Other Points of Interest This Week
In addition to the upcoming summit between the U.S. and China, earnings season will be starting later this week, with several heavyweights including JPMorgan Chase, Delta Airline and Citigroup reporting later this week. Analysts expect the S&P 500 to post a 2 percent decline in their Q4 earnings growth as compared with Q4 2018, the Financial Times reported. Retail sales from both the U.S. and the UK will be posted later this week, providing a glimpse into the economies of both countries and a hint to where they may be headed and whether interest rate cuts will be forthcoming.
The currency markets were mostly stable on Monday afternoon, with the strongest movements coming in the GBP/USD pair, which was down 0.34 percent to $1.3015, as the pound struggled on Brexit concerns and worries about the upcoming financial reports.
The dollar gained 0.16 percent against the yen as fears abated about escalating tensions between the U.S. and Iran. The pair was last trading at 109.63. The euro gained 0.06 percent against the greenback, trading at $1.1126.