The trade war between the United States and China has dragged on since the end of 2018 and has proven to be one of the biggest threats to the global economy in recent years. After all, when the two biggest economies in the world are engaged in a brutal trade war, then its effects are certain to be felt all across the world. After the talks broke down back in May, there were fears that it was going to continue for a long time. However, the trade representatives of the two nations are going to meet this week to resume talks over a trade deal and needless to say, there is optimism in the air among money. On the flipside, there is a degree of caution as well due to the failed talks earlier in the year, and that was reflected in the Asian markets today.
In the opening hours of trade in the Asian markets today, the stocks remained flat as investors remained cautious ahead of the talks this week. The trade negotiators of the two nations are going to be locked in a meeting this week in Shanghai, and although there is no hope of an immediate breakthrough, it will have an impact on the markets. One analyst at Barclays bank, however, noted that due to the ongoing distress in the markets, there is some optimism that the talks could lead to an eventual resolution. The analyst said,
“We remain cautiously optimistic that both sides can agree on a narrow agreement that addresses important trade-related issues, such as U.S. demands to increase exports. That said, we are sceptical about the prospects of a broader agreement that includes the more challenging security-related issues.”
On the other hand, the United States Federal Reserve is also going to have its meetings from tomorrow at the end of which it is expected to announce the rate cuts. Although the markets had expected rate cuts of as much as 50 basis points, it is believed that the Fed is going to cut rates by no more than 25 basis points.