Gold Silver Reports (GSR) – Asia Stocks Bounce from 2-month Lows as U.S.-China Trade War Fears Ease – Sentiment was lifted as the United States expressed willingness to negotiate a resolution to the trade fight after the proposed U.S. tariffs on $50 billion in Chinese goods prompted a quick response from Beijing that it would retaliate by targeting key American imports.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.2 percent, a day after it hit its lowest level in almost two month. Japan’s Nikkei .N225 gained 1.2 percent. Markets in mainland China, and those in Hong Kong and Taiwan, are closed on Thursday.
On Wall Street on Wednesday, the S&P 500 .SPX gained 1.16 percent and the Nasdaq Composite .IXIC added 1.45 percent, clawing back heavy losses of more than 1.5 percent right from earlier in the U.S. session.
“I think that the substance of trade restrictions and their real impact will be far less than the headlines,” said Jeffery Becker, Chairman and CEO at Jennison Associates in New York. “U.S. and Chinese cross border trade has grown significantly over the last decade and economic inter-dependence runs very deep, deeper than the actual trade numbers. And both countries have a lot to lose by escalating trade war.”
Many investors viewed U.S. President Donald Trump’s latest tariffs plan as a part of his negotiation strategy, rather than his final policy.
Indeed, Trump’s top economic adviser, Larry Kudlow, when asked whether the latest U.S. tariffs plan may never go into effect and may be a negotiating tactic, told reporters: “Yes, it’s possible. It’s part of the process.” He called the announcements by the two countries mere opening proposals. The trade actions will not be carried out immediately, giving the two countries room for maneuver.
The proposed 25 percent U.S. tariffs on some 1,300 industrial technology, transport and medical products from China now see a public comment and consultation period that is expected to last around two months.
Read More : Gold Is Heading to $1400 If Trade War Breaks Out
“Our view on the China-U.S. trade situation is that typically, the initial headline is worse than what we expect the implementation of ultimately turn out to be. So our expectation is it will remain tense situation but will not break out and to an all out trade war,” said Lillard, chief investment officer at PGIM Fixed Income in Newark, New Jersey.
Optimists also argued that the global economy is currently running so strong that it could cope with the impact of the proposed tariffs, which cover a fraction on the world’s trade.
Yet others also cautioned that uncertainties caused by fears of a trade war could keep many companies from capital expenditures in the near term. – Neal Bhai Reports (NBR) INDIA
