Trade War Update: Trump’s New Year Gift

US President Donald Trump gave the market one last gift during New Year’s Eve after he announced on Twitter that he would be signing the Phase One Trade Deal himself with China counterparts. According to Trump, the signing will take place at the White House on January 15, with the attendance of China’s high-level representatives. In addition to that, Trump further hinted that he would be visiting Beijing to start talks on Phase Two. 

Before Trump’s generous tweet, the market was expecting the Phase One deal to be signed during the first week of January, announced by US Trade Representative Robert Lighthizer. However, clarity on the deal’s details that were supposed to increase market risk appetite failed to take effect, as investors are still holding on to their safe-haven assets. 

Market’s movement on New Year’s Eve following Trump’s announcement could be explained in a few situations. First of all, the tweet failed to shock the market, investors are expecting the deal to be signed during early of January, and that the tweet served as a confirmation. 

Besides that, there are also other possibilities, such as skepticism towards any trade deal optimism, based on several previous disappointments caused by both sides. Supporting this statement would be a reply from China, where no news on the January 15 signing has been reported yet. 

As the trade war now enters the 18-month since initiation, signing on the deal would ease escalating tensions, providing a good start for the global economy as it comes the year 2020. As of now, investors will wait for the Phase One Trade Deal to be signed officially before gauging market sentiment ahead.   

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