Economy

China wants to make a deal, but do I?

China wants to make a deal, but do I?”

On Thursday and Friday, Beijing and Washington are set to engage in the next round of trade talks led by Vice-Premier Liu He on the Chinese side and Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin on the U.S. side.

A dive in the dollar catapulted the euro higher and flattened stocks on Thursday as the first US-China trade talks since July and a report accusing the European Central Bank chief Mario Draghi of going rogue jostled for attention. Trump added that the coaches "talk badly about the United States, but when it [comes to] China they don't want to say anything bad".

Dow futures fell by 300 points nearly immediately, with futures on the S&P and the Nasdaq Composite each taking a 1 percent hit. "At some point, however, there will be some semblance of outcomes across these dimensions, though we fear the finales may underwhelm as they are wont to do".

Still, Trump on Monday said he preferred a complete trade agreement with China. The issue of forced technology transfers, which China refused to put on the table, was the reason talks were at a standstill, SCMP reported.

A senior U.S. Chamber of Commerce official said U.S. and Chinese negotiators were working towards an "early harvest" of confidence-building agreements, including one to avoid currency manipulation.

S&P 500 mini futures traded down 0.2%, though losses had been trimmed by a New York Times report that Washington would soon issue licences allowing some U.S. firms to supply non-sensitive goods to China's Huawei Technologies.

The New York Times also reported that the Trump administration is grant licenses for some USA companies to sell nonsensitive supplies to Huawei.

Bloomberg News last month reported the White House was discussing plans for an interim deal. Earlier this year, the White House had banned sales to the Chinese tech giant, citing national security concerns. Bringing back the agreement could be an early sign US-China relations are warming up after over a year of tariff wars. "The transparency of these negotiations are overwhelming for markets but, I remain optimistic about the outcome".

Without significant progress, Trump is set to raise the tariff rate on $250 billion worth of Chinese goods to 30% from 25% next Tuesday.

"A choppy overnight session driven by conflicting signals regarding trade negotiations highlights the difficulty in chasing every 5 basis point move in yields, in that the proximate justification can unwind just as quickly", said Ian Lyngen, head of USA rates strategy at BMO Capital Markets. China reportedly plans to follow the move by restricting visas for Americans it perceives to have ties with anti-China groups.

The U.S. Agriculture Department said on Thursday that private exporters reported a snap sale of 398,000 tonnes of soybeans to China, part of a flurry of purchases the top buyer of the oilseed has made since granting waivers to some importers to buy U.S. soy exempt from tariffs as a goodwill gesture. "I think it looks less likely every time we take a unilateral action against China", Block said. The paper is owned by Alibaba and is often criticized for reports seen as favoring the Chinese government.



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