The Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN) got lifted on Tuesday as news outlets were flush with mostly positive news on U.S.-China trade talks progressing in the right direction. As the rest of the stock market toiled over volatility, YINN was up over 3 percent.
The Dow Jones Industrial Average climbed over 200 points on Tuesday on renewed optimism that a permanent trade deal between the United States and China was progressing based on a Bloomberg report that China would slash the current 15 percent tariff on cars to 40 percent. Based on the report, the proposal to pare down the tariff would be reviewed by the Chinese Cabinet in the coming days, but it has yet to be finalized and is subject to change.
Nonetheless, the news was interpreted by the capital markets that talks between the two economic superpowers are progressing. In addition, the news of the tariff cut was paired with U.S. President Donald Trump tweeting that talks with China are moving forward and that “important announcements” were forthcoming.
Very productive conversations going on with China! Watch for some important announcements!
— Donald J. Trump (@realDonaldTrump) December 11, 2018
Meanwhile, the White House is delaying a second round of payments on a $12 million package that benefits farmers negatively affected by the tariff-for-tariff battle between the U.S. and China, particularly soybean farmers. The delay comes as the U.S. hopes that a trade deal will materialize or further negotiations result in China resuming their purchase of U.S. soybeans.
A delay is certainly viewed as favorable by President Trump’s Office of Management and Budget at the White House who cite the aid program as a costly venture that could be allayed if a trade deal is struck between the two economic superpowers.
“It has been no secret that OMB has not been terribly excited about the trade aid package,” said a source familiar with the matter.