Support from the prospect of a trade agreement

14.03.2019
The stock market continued its positive trend in February. A significant factor behind the rise in share prices has been a friendlier tone between President Donald Trump and president Xi Jinping. At the end of February, Donald Trump even cancelled a planned raise in customs duties on Chinese goods in the expectation that the trade deal negotiations could soon be satisfactorily (for him, anyway) concluded.

The stock market seems to have anticipated the benefits of less trade policy sabre-rattling but it is by no means certain that a deal can be landed. Trump is known for being unpredictable and has almost turned being unpredictable into a virtue in his negotiations. The Chinese are struggling with a weakened economy and a high debt factor. At the present time, they have absolutely no need for further punitive customs duties and more problems for their exports. Also, the size of their personal shareholdings means there are fewer people on earth – quite literally – that have a greater potential for reaping the benefits of a trade deal with Trump and his administration.

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