There are some big dinner plans this Saturday for President Trump and President Xi. What they eat won't matter, but what they discuss will. Global markets are fixated on the outcome of their dinner meeting and whether it will produce a much desired trade truce.
President Trump and President Xi Dinner Meeting to Discuss Trade Matters (Saturday, December 1)
- Why it's important
- The world's two largest economies are locked in a trade dispute that has led to the imposition of tariffs on a wide range of imported goods, which has raised costs for affected businesses and has invited inflation risk for consumers.
- The U.S. imposed a 10% tariff on $200 billion of imported Chinese goods, but has said it will increase the tariff rate to 25% on January 1 if China doesn't agree to concessions that revolve around ending forced technology transfers, IP theft, large tariff barriers, and opportunistic restrictions on foreign companies doing business in China.
- The Trump Administration has also floated the possibility of pressing ahead with more tariffs on another $267 billion worth of Chinese goods if a trade deal to its liking doesn't get done.
- China's economy has slowed, which has had a ripple effect on the global economy. A prolonged trade dispute threatens to weaken China's economy further, as well as the U.S. economy, and lead to lower growth rates that impede earnings growth.
- Expectations are high in front of the dinner meeting that something positive will come out of it. If that isn't the case, global equity markets could be at risk of a sell-off on Monday. Conversely, a positive outcome could pave the way for a good start to December.
- A closer look
- What's in play?
- Index ETFs
- SPDR S&P 500 ETF (SPY)
- Invesco QQQ Trust (QQQ)
- iShares Russell 2000 ETF (IWM)
- SPDR Dow Jones Industrial Average ETF (DIA)
- iShares China Large Cap ETF (FXI)
- Xtrackers Harvest CSI 300 China A ETF (ASHR)
- Sovereign bonds
- Commodities
- Equity Index Futures
- Currencies
- USD/CNY
- EUR/USD
- USD/JPY
- USD/CHF
- GBP/USD
- Index ETFs