USA reaches new trade deal with China

USA reaches new trade deal with China

The bottom line is that agreement in principle on "Phase 1" will need to be followed by further action soon, otherwise market sentiment will sour.

It was "positive for the two sides" to reach an agreement on the text of the phase-one deal before the end of this year, said Han Jae-jin, a manager of the global emerging markets team at Hyundai Research Institute in Seoul, adding the "agreement itself was greater than expected". But Mr. Lightizer forecast that once the agreement goes into effect in January, Chinese purchases of American-made products would increase by more than $100 billion a year. With more inflows the HKD might strengthen against the United States dollars, ' said Iris Pang, Greater China Economist at ING Bank.

The FTSE 100 .FTSE , which had seen its best day in almost a year on Monday, dropped 0.2% and the UK's domestically focused mid-cap index .FTMC plunged 1.6%, after reports UK PM Boris Johnson would use his control of parliament to ban any extension of the Brexit transition beyond 2020. France's CAC 40 added 0.8% to 5,965.21.

Stocks closed broadly higher on Wall Street Monday, extending the market's gains from last week and sending the major indexes to record highs. Tokyo's Nikkei 225 lost 0.3% to 23,952.35 and Hong Kong's Hang Seng index shed 0.4% to 27,568.97.

KEEPING SCORE: The S&P 500 was up 0.9% as of 1:15 p.m.

The Australian and New Zealand dollars were flat versus their United States counterpart, with the aussie giving up earlier gains after Australia's government downgraded the country's growth forecast, fuelling expectations of further monetary easing. Port of Los Angeles Executive Director Eugene Seroka told reporters during a November meeting in Washington, D.C., that tariffs threatened 1.5 million jobs and $186 billion in economic activity.

CHINA STRENGTH: China's industrial production rose 6.2% from a year earlier, up from the previous month's 4.7%.

According to the office of the US Trade Representative, the US will maintain 25% tariff on approximately $250 billion of Chinese imports, along with 7.5% tariffs on approximately $120 billion of Chinese imports.

The two sides also agreed to roll back some punitive tariffs, but investors already had factored that into their plans.

"It's good news but we can't celebrate yet", said Mark Mobius, founding partner of Mobius Capital Partners and former executive chairman of the Templeton Emerging Markets Group.

West Texas Intermediate crude CLc1 settled up 14 cents, or 0.2%, at $60.21 a barrel.

Just how shamelessly the president sought to reap political gain can be seen in his claim to reporters that the deal is "going to ultimately lead to the opening of China, which is something that is incredible, because that's a whole, big, untapped market of 1.5 billion people". [O/R] Brent crude held steady at $65.32 per barrel, after climbing on Monday. The dollar also fell 0.17 percent against the Canadian dollar, fetching $1.3142. The euro advanced to $1.1140 from $1.1120.

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