The new year has just begun, but already the markets are rallying. The positive mood is caused by Donald Trump’s announcement that the long-awaited phase-one trade agreement with China will be signed on January 15.
Stock indices in the United States and Asia were among the biggest winners; in Europe the response of the markets was overwhelmingly positive. Japan is the only country today where stock market indices are running at a loss.
Besides the confirmation that a deal with China will be signed soon, the financial markets were also boosted by China loosening its monetary policy. It has done so several times in the last few months, mostly to cushion the blow to the economy caused by the United States’ tariffs. Now the move was inspired by the upcoming Lunar New Year holidays, when China expects increased consumer spending.
Moreover, today there was an influx of PMI data. In Europe, the indices performed better in December compared to the previous month, but at 46.3 they still indicate the economy is shrinking, rather than growing. This is likely to remain a concern throughout 2020.
Later on in the day we expect unemployment data from the United States, as well as the minutes from the Federal Reserve’s December policy meeting, though the latter is not likely to bring any surprises.
