Stocks Gain as Trade War Tensions Soften

After nearly two years of fighting, it seems both China and the US are finally trying to de-escalate the trade war tensions.  Just yesterday, China had exempted about 15 goods from tariffs, a move that hasn’t been seen since the start of the war.  In response, the President said he will delay the planned increase in tariffs from October 1st to October 15th.  This caused both markets to rise.  Analysts, however, warn that this doesn’t necessarily mean that the trade war will end. 

The Dow climbed for its seventh day in a row, a gain streak we haven’t seen in about a year.  This is in part of the waiver from China but also the announcement from the European Central Bank.  The European Central Bank (or ECB) recently announced a stimulus package to help with Europe’s economy.  Included in the package is plans to cut interest rates to -0.5%.  Some economists are hopeful this will encourage the Federal Reserve to do the same.

Many countries in Europe are suffering from low growth.  Most of Europe saw 0.2% growth in the second quarter, down from the previous 0.4% in the first quarter.  Recession woes are looming over Europe, with some countries dangerously close.  The overall global economy is feeling the same pressure, dancing between the line of a recession.

These latest announcements come a month ahead of negotiations.  However, China’s waiver was not a concession for the US, but merely a way to assist in China’s economy which has been planned since May.  From what we’ve seen in the last two years, the trade war is unpredictable.  Still, our stocks are taking the waiver as a positive sign, albeit small, looking ahead at trade talks next month.

In a sudden turn of events, the President mentioned he may consider an interim deal with China.  Fingers crossed this would be at the top of the agenda for next month’s trade talks.

The Dow closed 45 points higher today, ending the day at 27,182.45.  The Nasdaq closed nearly 25 points higher, but only 0.3% gain.  The S&P also closed 0.3% higher today at 3,009.57.