This week the financial markets have been reassured that there is hope for the end of the trade war between the United States and China. President Trump and Xi Jinping will be meeting during the G20 summit this weekend to settle their differences and discuss how to move forward.
The good news comes after weeks of deteriorating trade relations between the world’s two largest economies. Previously, the United States turned against China when, months into the negotiations for a trade deal, the US claimed that China was backing out of promises made earlier. The Chinese denied having made any prior commitments and insisted they were defending their national interests, trying to negotiate a deal that is good for both countries, not just for the United States. As a result, there were renewed, heavier tariffs against Chinese goods, and the markets slumped due to increased risks.
Now it appears the two presidents have privately agreed to postpone the newest round of tariffs against China and begin negotiations once more. This announcement boosted risk appetite on the market, so we saw stocks increase, while safety assets weakened slightly.
