The Asian markets didn’t receive Chinese President Xi Jinping’s rousing speech on the economic progress of China warmly as the major indexes fell following the hour-and-a-half-long discourse at Beijing’s Great Hall of the People on Tuesday.
Xi’s superlatives included future initiatives that will come in the form of “miracles that will impress the world.” However, the Asian markets were anything, but impressed.
“Asian markets followed the US lower overnight as Japan’s Nikkei led the way down, finishing lower by 1.8%. Australia was lower by 1% and Hong Kong and China both finished down over 1% as a speech by China President Xi did little to change sentiment. Korea’s Kospi finished lower by 43 bps,” said Brian Gilman at Virtu Financial.
Xi’s speech espoused support for private companies and state-owned enterprises, but did not include any succinct details on how to accomplish these goals. Furthermore, there was no mention of the progress between China and the United States in solving the ongoing trade wars between the two largest economies.
While a trade deal between the United States and China could give Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN) traders the trigger event for positive gains, traders can also look to play the weakness with the Direxion Daily FTSE China Bear 3X ETF (NYSEArca: YANG).
“For a set note speech aimed primarily at a domestic audience, Xi was perhaps unsurprisingly long on rhetoric and short on details,” said Tom Rafferty, the chief China analyst at the Economist Intelligence Unit.
Last Friday, capital markets in China were deep in the red as the country reported that industrial output and retail sales growth numbers for November fell short of expectations–a sign that China’s economy is losing its forward momentum. The weaker data also reflects the ramifications of the ongoing trade war with the United States, which could play heavily in trade discussions moving forward as China may be forced to give up more concessions to make a deal.
Day 18 of Ceasefire
U.S. President Donald Trump and Xi agreed to cease fire on their tariff-for-tariff battle. The truce reached at the G-20 Summit didn’t quell investor fears as markets in the U.S. and China have been fretting on the notion that a trade deal can only materialize after lengthy discussions between the two economic superpower.
Furthermore, contentious topics like forced technology transfer and intellectual property could derail negotiations.
Trump and Jinping met at the G-20 Summit in Buenos Aires, putting global markets on pause as the two economic superpowers met to hopefully ameliorate their trade differences. As part of the agreement, both nations agreed to withhold imposing further tariffs on each other for 90 days while they work out a firm, ironclad deal.
With the clock ticking and 18 days into the truce, the markets have been reaching for any type of media olive branch thrown its way in the form of positive news. However, if trade negotiations continue to progress to where a trade deal with permanence is the byproduct, then YINN traders will obviously feel the benefits and conversely for YANG.
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