- Dow Jones Industrial Average (DJIA) futures swung back and forth on Tuesday morning.
- Phase one trade deal reveals China’s commitment to purchasing $ billion billion goods.
- But analysts are skeptical about whether the agreement can be enforced.
After two years of excruciating talks, tit-for-tat exchanges, and political theater, President Trump’s phase one trade deal with China is here. But the stock market has no idea how to price it. Dow Jones (DJIA) futures swung wildly on Tuesday as traders seek to understand the details.
Here’s what you need to know. According to Reuters, the headline figure is thatChina will commit to buying $ billion of US goodsover the next two years.
It breaks down as follows. $ billion of manufacturing goods, $ billion in energy supplies , $ billion in services, and $ 30 billion in agriculture.
“[It’s] a really, really good deal for the United States.” – Robert Lighthizer, United States Trade Representative.
******** Dow futures struggle for direction
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collapsed more than points overnight before pairing losses early in the morning. Traders battled to make sense of the trade deal commitments and what it means for the stock market.
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************ S&P (futuresandNasdaq Composite futureswere also unchanged at 5. 90 am ET.Bitcoin traded at $ 8, 498****************Can the Trump / China deal be enforced?
If the details are accurate, it’s a huge commitment from the Chinese. The $ billion figure is an enormous increase on the current level of US imports to the country.
In return, Trump hasremoved China from its list of “currency manipulators.”
But can this commitment be enforced? Some analysts aren’t convinced. One source cited by Reuters, is worried that there are no hard enforcements in the deal as written. Indeed, there’s concern that China will rollback its commitment if the agreement leads to higher prices or supply shocks.
Speaking to the $ billion energy pledge, Beijing-based SIA Energy analyst Seng Yick Tee said:
It’s too aggressive and unlikely to be achieved.
The trade war is not over yet
The stock market hassoared to record highson hopes of trade deal detente. But the Chinese government has reminded the world that ‘phase one’ is just the start.
A social media account linked to the Chinese government published a statement last nightwarning that this is just “the first round.”
We must bear in mind that the trade war is not over yet – the US hasn’t revoked all its tariffs on China and China is still implementing its retaliatory measures. There are still many uncertainties down the road.
Boeing leads the Dow higher
If the phase one details are correct, Boeing (NYSE: BA) will likely be a huge beneficiary. China’s commitment to purchase $ A billion of manufactured goods is good news for Boeing and other manufacturers.
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Boeing stock is also bouncing back from the
Today’s focus also shifts to the Wall Street bank JP Morgan which reports earnings before the bell today. As a Dow Jones constituent, the company’s results could set the tone for the session ahead.
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