Wall Street rallies on US/China trade deal Phase 1 agreement
- The Dow Jones Industrial Average rose 319.92 points, or 1.2%, to 26,816.59.
- The S&P 500 index climbed 32.14 points, or 1.1%, to 2,970.27.
- Nasdaq Composite Index added 106.26 points, or 1.3%, to 8,057.04.
U.S. stocks rallied on Friday following a positive outcome of the high-level trade negotiations between the US and China on Friday. Consequently, the Dow Jones Industrial Average rallied over 500 points or 2% at its highest level. The Dow Jones Industrial Average rose 319.92 points, or 1.2%, to 26,816.59, the S&P 500 index climbed 32.14 points, or 1.1%, to 2,970.27, while Nasdaq Composite Index added 106.26 points, or 1.3%, to 8,057.04. For the week, the Dow climbed 0.9%, while the S&P 500 and Nasdaq added 0.6% and 0.9% respectively.
Announcements were made just ahead of the Wall Street close following the meeting between President Trump, colleagues and Chinese Vice Premier Liu. Trump said that they have come to a substantial phase 1 deal with China. However, gains lost momentum toward the close following the announcement of a Phase 1 agreement lacked clear details.
Subsequent statements from Trump as follows:
- The agreement is a ‘big deal’; It is better to do deal in ‘sections or phases’.
- We have mode progress on tech transfer, more on that in phase 2.
- Also agreed on currency and FX issues.
- Structural AG issues have also been addressed.
- China has agreed to make 40-50bln USD in AG good purchases.
- Will take up to 5 weeks to get deal written.
- Have come to deal on intellectual property, financial services and big AG purchases.
- The currency deal will be of tremendous benefit.
- We are very close to ending trade war.
- To do a formal signing with Chinese pres. Xi
- Signing could happen at APEC Chile 2019 (Nov 16-17).
- Not expecting deal to fall apart over next few weeks, ‘though there is a possibility’ it will.
- Phase 2 of deal to include some IP aspects.
- Discussed Hong Kong.
- Things have toned down there and he thinks that’s going to take care of itself.
- We will look at the blacklist and what companies should be on it.
- Fed should cut rates despite this deal.
- Little doubt that we will be able to finalize this deal.
Additionally, there was no decision made planned on a new 15% tariff set to go into effect on December 15 on about $160 billion in annual Chinese imports.
The index extended gains in a reversal of the end of September slide and scoring through the 27000 psychological level, albeit leaving a bearish pin-bar on the daily chart with price moving back tot he trendline resistance turned support. Next week’s open will reveal whether the 27500s and a break of the July highs will be achievable in the near-term. Bears will otherwise seek a close back below the trendline with a focus back on the 200-DMA down in the 26400s.