IMMEDIATE PACT SEEN AS UNLIKELY
Both the US and China may want, or even need, to reach a deal, said Liqian Ren, director of Modern Alpha at WisdomTree Asset Management. At this early stage, however, there seems to be little incentive to do so rapidly, she added.
“Each still wants to see how the other side copes with negative headwinds,” Ren said.
“Right now, the market is maybe a little bit too optimistic in terms of what China and the US can achieve and how fast events will move.”
Trade tensions between the two nations escalated last month, when the US boosted tariffs on all Chinese imports to a whopping 145 per cent, and China then raised levies on US imports to 125 per cent.
On Friday, comments by Trump that an 80 per cent tariff on Chinese goods “seems right”, making his first suggestion of a specific alternative to the 145 per cent levies, created some hope of progress toward resolving the dispute.
The benchmark S&P 500 stock index has already erased the steep losses seen in the immediate aftermath of the tariffs announcement on Apr 2, although businesses continue to warn investors of their impact, and the uncertainty they create, in earnings-related comments.
The S&P 500 remains down about 8 per cent from its February all-time high and roughly 4 per cent for the year.
Amid the tariff chaos, weak consumer sentiment surveys and other “soft data” have raised concerns about US growth, although most economic data has indicated resilience in the economy.
