This Tuesday, November 5, the Dow and Nasdaq hit new records due to a boost in investor sentiment over a pause for the trade war with China.
On October 11, US and Chinese negotiators seemed to reach a preliminary agreement that was supposed to ease trade tensions between countries. Donal Trump stated that it will take three to five weeks to put the ‘phase one’ trade deal into action. However, since then, the progress seemed to stop completely and it is still unclear when and where the two parties will officially sign a final agreement.
However, according to officials, the United States has started to access current tariffs imposed on Chinese imports in order to get closer to the final agreement.
A senior economist of BMO, Sal Guatieri, wrote in a note to clients that stocks “look to extend the market’s rally amid growing optimism that, as part of phase one of trade talks, the US will suspend tariffs on $156 billion of Chinese imports scheduled to take effect on December 15 and possibly roll back the September 1 tariffs on about $110 billion in goods.”
Taken from: http://www.advfn.com
The Dow Jones Industrial Average (INDU) finished that day up 0,2%. Meanwhile, the Nasdaq Composite (COMP) raised up 1,48 points. The S&P 500 (SPX) decreased by 0,1%. It is worth to mention that all indicators mark an absolute record.
Moreover, the bullish backdrop was also supported by an increase in the Institute of Supply Management’s nonmanufacturing index , which climbed to 54,7 in October.
All of that happened regardless of fears over contagion from the downturn in manufacturing after the indexes dropped below expectations in September.