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US China Trade Impact

11 Dec 2019

As per latest report, US and China are on a deal to negotiate on the tariff deduction on China. The Chinese Commerce Ministry put forth a deal to settle on that US tariffs must be rolled back to initiate a fresh deal between the two biggest economies.

Due to this continued negotiation between the two economies, effects can be seen in Indian markets. Experts are of the opinion that bullions market is expected to trade on a flat note, but dollar’s weakness kept the bullion on track for a weekly rise.

The impact of this deal between US and China fell on every sector. The RBI unexpectedly kept benchmark interest rates unchanged on concerns of headline inflation breaching its medium-term target. Bankers and economists has widely expected the central bank to cut rates for a sixth time to support a slowing economy.

As mixed signals on US -China phase-one deal continued, it is discouraging the investors from making risky bets and consequently, European shares steadied after stellar gains.  

Stock markets in Asia inched up on Thursday on the possibility that China and the US may soon seal a “phase one” deal to end their 17-month trade war, but conflicting messages from US President Donald Trump kept a lid on the advance. The Asian markets were slightly higher on hopes that the US and China might be able to sign a preliminary trade deal, though uncertainties still remained intact due to almost daily shifts in prospects for early talks.

The US officials are of the opinion that as the trade talks between the two countries is moving on positive mode, so China has to wait until the US Presidential election, to come to a final conclusion. However, If China wishes to seek the deal now, then Washington has to reflect on its consequences whether it will be beneficial or not. This comment of the US President showed a visible impact on the exchange market which triggered the fall of stocks and the rise of the Government bonds.

The Chinese officials are sticking to their concern that the existing tariffs must be cut off to restart fresh deals between the two powers.

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