After US President Donald Trump and Chinese officials announced over the weekend that phase one of the trade deal may have been agreed upon, US stocks were traded lower. A report claimed that the stock price drop is in response to China's promise to purchase more US imports into the country as its compromise to the trade dispute.
According to Cornelius News Radio, the announcement showed improvements in US stocks. The report indicated that the Dow Jones Industrial Average (DJIA) fell by 44 points at 0.2 percent or 28,087after China promised to purchase more US imports over the weekend. The S&P 500 index also fell by six points at 0.2 percent or 3,162 while the Nasdaq Composite Index lost around 8,716 or less than one point. These values were based on last Friday's reports.
The report then added that there had been an improvement over the weekend. the DJIA then closed at 220.75 points which are 0.8 percent higher than the Friday values. It is now at 28,132.05, the highest value it has earned this year. The same improvement was seen for the S&P 500 index which also rose to 0.9 percent closing in at 3,168.58. Lastly, the Nasdaq Composite Index overturned the loss and gained 0.7 percent or 8,717.32 also over the weekend.
It was also mentioned that experts expect the DJIA to experience another increase at 0.4 percent in the coming days. Similarly, it also indicated that S&P and Nasdaq would also gain soon with a forecasted rate of 0.7 percent, respectively.
The report also claimed that the improvements to the shares of the three indexes showed that phase one of the trade deal has triggered positive market changes. It was mentioned that the structural reforms agreed upon by both countries including the promised alterations to China's economic and trade regime regarding technological transfers, intellectual property, financial services, agriculture, and forex matters enticed investors.
According to Marketwatch, vice president of trading and derivatives at Charles Schwab Randy Frederick said that the trade deal caused the stock market to pull back and generate profits. He also added that the investors have been expecting the trade deal to improve over the weekend that was shown on how the market has been pricing over the December 15, 2019, tariff waiver.
Frederick added that it would be highly unlikely for phase two of the trade deal to commence before the re-election of US President Donald Trump in December 2020. Hence, he claimed that there is a doubt that the economic data and earnings made in phase one may not be sufficient and promising until then. He also claimed that the waiver of new tariff rates may push the market even higher in the coming months.
