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Dow closes 300 points higher on new trade deal with China

Dow closes 300 points higher on new trade deal with China

First, an "ice-breaking meeting that will lead to a major deal" in the coming months, second, a "mini-deal" focusing on China's purchase of US products and some structural reforms while new tariffs get postponed indefinitely, third, a no-deal status quo where new tariffs come into play, but negotiations continue, and finally, a break-up scenario, where there's no deal and no further dialogue between the USA and China. The note also said that the 2020 election could influence Trump's thinking; the president has regularly touted his ability to improve the economy, but a range of recent data have hinted at slowing growth, with many economists concerned about the impact of the trade war with China.

US President Donald Trump shakes hands with Chinese Vice Premier Liu He during a meeting at the White House in Washington on Friday, after the two sides agreed on an outline for a partial trade deal.

The trade war between the world's two largest economies - China and the USA - has rattled global financial markets. In exchange, the USA agreed to hold off on tariff hikes that were set to take effect Tuesday.

"I believe that there's even the possibility of a currency agreement this week", Myron Brilliant, the head of global affairs at the US Chamber of Commerce, told the media.

China has agreed to open its markets to US banks and other financial services providers, Mnuchin said.

"I don't think it should be a problem getting it papered", Mr. Trump said. Reportedly, the two countries have come to a preliminary deal to make things work better.

Trump was expected to meet with Beijing's top trade envoy Liu He later on Friday and the two sides are likely to make a positive announcement.

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It was a big recovery from overnight trading, where Dow futures plummeted 300 points after a report from the South China Morning Post said China's vice premier was planning to leave on Thursday night instead of the original plan for Friday - dashing hopes of an amicable visit.

The S&P index recorded 26 new 52-week highs and no new low, while the Nasdaq recorded 42 new highs and 38 new lows.

The U.S. was set Tuesday to raise tariffs on $250 billion worth of Chinese imports to 30%, but Trump said the hike will be suspended.

China's exports to the United States, its biggest foreign market, have plunged, adding to pressure on Xi's government to shore up cooling economic growth and avoid politically unsafe job losses.

While the details are scant, Mnuchin said the sides made good progress on opening the Chinese economy to financial services, while including an agreement on preventing manipulation of the yuan. Trump launched a tariff campaign early a year ago as part of a strategy to end China's decades-long unfair trade practices.

The S&P 500 and Dow Jones indexes looked set to break a three-week losing streak on optimism that the world's top two economies could cool off their row before more US tariffs kick in next week. In May U.S. officials accused China of walking away from a sweeping agreement that was almost finished over a refusal to make changes to Chinese laws that would have ensured its enforceability.

If Friday's negotiations and Oval Office meeting go well, Trump and Liu could also begin laying the groundwork for a meeting between Trump and Chinese President Xi Jinping at next month's APEC summit in the Santiago, Chile.