Stocks recent rebound creates hope and optimism among investors
The Stoxx Europe 600 Index had its best week in two years.
As corporate earnings are announced, investors are holding their breath – now it looks like clear skies ahead as markets rebound.
Investors have achieved a new optimism after president Donald Trump had a phone call with Chinese President Xi to discuss the ongoing trade dispute between the two countries – the first public conversation in six months.
The phone call shows that there are still hope for a reasonable solution that will not affect global growth as many have feared.
The two presidents have agreed to meet at the upcoming G20 summit in Buenos Aires, Argentina.
Investors have worried about Donald Trump´s threats to impose further tariffs on an additional $267 billion in Chinese goods and the damage the move could do to American consumers and companies. The duties would come on top of tariffs already imposed on $250 billion in Chinese imports.
China has responded with retaliatory duties on $110 billion worth of US goods.
As nothing is clear yet and no further details have been published about the talk between the two leaders, the upswing after President Donald Trump’s tweet could turn out to be a short-term event.
Not only the American market felt the good news – Chinese tech stocks traded in the US, surged after the news.
For president Trump, trade and the relationship to China are important issues in the election strategy for the presidential election in 2020. As of now, a solution does not seem very likely as president Trump are listening to the advisors that are hoping for a confrontation with China in order to break the global and regional ambitions of the country.
The White House believes that the US is in a very favorable situation as the American economy is still supported by tax-cuts – the Chinese government is trying to stimulate the activity which shows that China has been hit with the downturn and so the Chinese stock index shed 20% since February 1. While the American S&P 500 “only” dropped 4%.