US-China Trade Talks Leave Wall Street in Suspense
Stock market anticipation pauses as US-China trade negotiations unfold
When it comes to Wall Street, everyone's eyes are on the ongoing trade talks between the US and China. The recent discussions did little to impress the market, with the Dow Jones Industrial Average closing flat at 42,761 points. The tech-heavy Nasdaq and S&P 500 inched up slightly, with the former advancing 0.3% to 19,591 points, and the latter ending 0.1% higher at 6,0005 points.
The high-level talks, led by US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, US Trade Representative Jamieson Greer, and Vice Premier He Lifeng of China, started on Monday afternoon and are expected to continue into Tuesday. The US is aiming to reach a basic agreement on rare earths, although China has remained aloof on this matter.
Peter Cardillo, chief economist at brokerage Spartan, believes a compromise deal is eminent. "I believe there will be a compromise deal, but at least a deal. That would alleviate some of the uncertainty surrounding tariffs," he said.
The talks were arranged on short notice following a telephone conversation between US President Donald Trump and his Chinese counterpart Xi Jinping last week.
Chip Stocks Shining Bright
In the tech sector, chip stocks were among the winners on Monday, with Qualcomm and AMD each gaining around 4%. Kim Forrest, founder of investment advisory firm Bokeh Capital Partners, explains that China's investments in Artificial Intelligence (AI) could benefit the sector if other countries are allowed to resume supplies there.
Elsewhere, the US dollar weakened slightly, falling 0.2% against a basket of currencies to 98.973 points. The gold price rose 0.5% to $3,327 per troy ounce, as economic data from China caused concern. China's exports grew at their slowest pace in three months in May amid the trade conflict with the US, with imports also falling more sharply than expected.
Gold - The Safe Bet in Uncertain Times
commentators attributed the continued demand for gold to ongoing trade tensions, debt concerns, and weak economic growth. Gold is traditionally seen as a safe haven in times of political and economic uncertainty.
The US-China trade conflict and a persistent slowdown in the real estate sector are weighing heavily on the Chinese economy. In individual stocks, new decrees in the aviation sector boosted shares of flying taxi developers, with Joby Aviation and Archer Aviation each gaining over ten percent. However, Robinhood fell nearly two percent after missing out on being included in the S&P 500, while Apple lost 1.2 percent due to little new innovation in the area of artificial intelligence during its annual developer conference.
As the situation unfolds, investors remain wary, waiting for formal confirmation from China before fully committing to the markets.
Source: ntv.de, gut/rts/DJ
- Wall Street
- USA
- Rare Earths
- Dow Jones
- China
- Gold Price
- U.S. Dollar
- Apple
- Robinhood
- Donald Trump
- Xi Jinping
Enrichment Data:
- Impact on Markets: A potential trade deal between the US and China could lead to positive market sentiments, as it would reduce uncertainty around further trade escalations and the risk of renewed tariff spikes.
- Expected Outcomes: In the event of a formalized deal, markets are likely to interpret this as a reduction in downside risks related to US-China trade, potentially leading to modest gains across major indices. However, lingering concerns about enforcement and the longevity of the agreement may temper bullish sentiment.
- Monitor for Confirmation: The lack of immediate confirmation from China means that market reactions could remain cautious until further clarity is provided by both governments.
- The Commission, being a part of the EU, may play a significant role in the financial aspects of a potential US-China trade deal, as the budget of the European Union could be affected by changes in the trade relationship between the two superpowers.
- As the tech sector continues to grow, potential investments in businesses related to artificial intelligence, such as chip manufacturers, could be a promising venture due to China's increasing focus on AI technology, as seen in their investments and decrees in the aviation sector, given the positive impact on markets resulting from a reduction in trade uncertainties.
