The major indexes have been racked by volatility in recent sessions as the reality that a tangible and permanent trade deal is necessary has been settling in with investors. The probability of reaching an agreement didn’t improve after news broke that Meng Wanzhou, the CFO of Huawei, one of the world’s largest mobile phone makers, was arrested in Canada and faces extradition to the U.S.
As such, the markets have been reaching for any time of media olive branch thrown its way in the form of positive news.
“It is important for the market to get positive headlines at this time,” said Quincy Krosby, chief market strategist at Prudential Financial. “This is sustainable if we don’t hear a contradiction. This has been part of the problem. The algorithms work instantaneously and if we get someone with an opposing view we could turn around.”
Last week, the capital markets breathed a sigh of relief as President Trump and Chinese president Xi Jinping agreed to cease fire on their tariff-for-tariff battle, giving the markets hope that a year-end rally could ensue.
However, the market boost was short-lived as the truce didn’t quell investor fears as markets fretted on the notion that a trade deal can only materialize after lengthy discussions between the two economic superpowers. Furthermore, contentious topics like forced technology transfer and intellectual property could derail negotiations.
However, if trade negotiations continue to progress to a point where a final, tangible trade deal with permanence is the byproduct, then YINN traders will obviously feel the benefits.