Ongoing trade tensions between the U.S. and China have dominated–or seemingly monopolized–the financial headlines for the past two years. So it comes as no surprise that this week’s historic signing of a phase-one trade deal between the world’s two largest superpowers has once again significantly moved markets.
A gauge of global equity markets hit a record high on Monday, lifted by optimism over Wednesday’s planned signing, while gold fell nearly 1% in response to the imminent signing and deescalating tensions in the Middle East.
On Tuesday, the Dow edged higher in response to strong earnings from big U.S. banks, although markets lost a bit of steam later in the day over reports that U.S. tariffs would likely stay in place until after the U.S. election in November. After losing ground on Monday, the TSX was up 59 points Tuesday, lifted by rising oil prices.
Meanwhile, China’s currency on Tuesday strengthened to its strongest level since July, after the U.S. Treasury Department removed China from its list of currency manipulators.
By Wednesday’s close, the Dow climbed above 29,000 after President Trump and Chinese Vice Premier Lui He signed an initial trade pact that will roll back some tariffs and see China increase purchases of U.S. goods and services by $200 billion over two years.
On Thursday, U.S. investors shifted their focus to corporate earnings. After a strong Tuesday, bank earnings have been largely mixed, weighed down by Wells Fargo, which continues to struggle to recover from its fake accounts scandal. According to FactSet, Q4 earnings for S&P 500 companies are expected to decline 2.3% from a year earlier. And yet U.S. stocks rallied to new highs Thursday in light of solid U.S. retail spending for December. The TSX also continued its climb, hitting a new record close at 17,485.
source https://richarddri.ca/dow-crosses-29000-mark-as-u-s-china-sign-phase-one-trade-deal/
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