Trade war

Lets talk. China and U.S. to resume trade talks Thursday 10th October

Lets talk

Where now for trade talks?

The market is heavily preoccupied with the upcoming U.S. – China trade talks due to resume on 10th October in Washington. Every little nuance pushes the market. The tiniest whisper to an explosive news piece can dramatically move markets. So, where now for the trade talks?

U.S. – China trade talks to resume

China has already indicated that certain issues are not on the table for discussion – such as state subsidies for instance.

So far, the U.S. has not made any obvious direct comment about this – could it be President Trump will be looking at this differently this time?

Maybe he will suggest solving the tariff and trade issues first and deal with the more difficult political issues later? Wishful thinking? He does need the trade tariff issue resolved soon, doesn’t he? Especially with the U.S. elections on the horizon.

Damaging trade war

US & China flags

Let’s face it – trade wars and tariffs are unlikely to fix the deep rooted concerns the U.S. has with China and its trading imbalances? This may very well take years to resolve.

Positive outcome possible?

Just the smallest glimpse of a positive outcome from these latest talks will pave the way for more negotiations and keep the markets happy, for now at least.

But I fear the recent ratcheting up of rhetoric from both sides have created even more market uncertainty. China is requesting the U.S. stay out of internal politics and and stay away from its domestic affairs. China also wants the U.S. to remove the Chinese businesses placed on a trade blacklist.

Is the Trump administration placing obstacles in the way of these talks as part of its negotiating tactic? Is this just about trade and tariffs, or is there much much more on the agenda here?

And then there’s the worrying escalating tensions in Hong Kong.

Stocks in Asia retreat amid U.S – China trade uncertainty.

I’m amazed these talks are still going ahead at all…

Latest issues ahead of Thursday’s trade talks

China ‘strongly urges’ U.S. to remove sanctions and stop accusing it of human rights violations.

U.S. reportedly places restrictions on Chinese officials over alleged potential human rights issues.

U.S. blacklisted a number of Chinese businesses.

Stock Markets down

China requests U.S. to drop latest blacklist.

China state TV fallout with U.S. NBA over Hong Kong protests.

Could the protests in Hong Kong derail the talks planned for Thursday?

How is this affecting markets?

Dow fell yesterday to 26164 as these concerns emerged but futures are up around 100 points at 10:00 BST. Japan’s Nikkei closed down at: 21456. Hang Seng index closed down at: 25683.

Other market moving news

The Fed said…

The Federal Reserve chair, Jerome Powell, said Tuesday that the Fed will start expanding its balance sheet again ‘soon’. Concerns about the overnight lending markets a number of weeks ago, spurred the Fed into action. On interest rates the Fed said it will stay data dependent.

See Repo report here

Bank

See U.S. liquidity issues report here

Trade deal talks latest update

Indices spiked around 10:10 BST following a Bloomberg report suggesting that China is willing to discuss a ‘partial’ trade deal with the U.S. despite rising tensions in recent days. Hopes for a resolution to the U.S.- China trade war had started to fade this week.

The Chinese are ready to ‘de-escalate’ the trade war. This has to be good news for the markets and for futures negotiations.

FTSE 100, EU indices and U.S. futures are all trading up on the news.

Brexit – EU concession?

Sterling moved higher Wednesday morning, after a Times newspaper report suggested the EU is allegedly ready to make a major concession in negotiations over the U.K.’s EU withdrawal. But the DUP rejected the alleged EU Brexit concession.

Thomas Cook

Reports Wednesday suggest Thomas Cook has been bought by Hays Travel. Hays Travel press announcement.

Excerpt from Hays Travel press release…

Up to 2,500 jobs at Thomas Cook could be saved after Hays Travel, the UK’s largest independent travel agent, today agreed to buy the historic holiday company’s high street shops. For more details see Hays Travel press announcement.

Hays Travel will acquire the entire retail portfolio of 555 former Thomas Cook shops after it signed a deal with the Official Receiver and Special Managers from KPMG. 

Libra cryptocurrency

Facebook’s proposed digital currency, Libra, will face tough regulatory scrutiny before its launch in 2020 – says The Bank of England.

Libra digital currency

Facebook has faced disapproval from regulators and central banks worldwide.

Dow climbs

Dow opens up 150 points buoyed by reports China is open to a ‘partial’ trade deal with the U.S.

Dow, DAX, FTSE 100, Nasdaq, Nikkei & S&P 500 – Wednesday 9th October 2019

Dow closed down at: 26164

Dax closed down at: 11970

FTSE 100 closed down at: 7143

Nasdaq closed down at: 7824

Nikkei closed up at: 21588

S&P 500 closed down at: 2893

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