Here is your one minute read on the major event today. US-China sat for a tariff reduction agreement on May 10-11 in Geneva. US took a step-back and reduce tariff on Chinese good from 145% to 30%. China also lowered its tariff from 125% to 10%.

What’s the aftermath?

Market has been rebound after this news. Hong-kong’s Seng index rose by 3% in a day. S&P 500, on the other hand, showing some optimism and surged over 2.65%. In short term, the market seems positive and stock exchanges are easing and investors gaining confidence at least in the long run. Investors are selling treasury rate at a pace that treasury yields touched the highest in the month as the tariff rate cut news came out. It seems investors are gaining confidence on equity market again. US companies that have heavy production on China such as Apple and China saw a growth in their stock price. Both of the stocks appreciated by 5.8% and 6% respectively

Who is loosing?

Industries such as steel, aluminum, and automobiles gained almost nothing from this talk. They will continue to face 20% tariff.

What’s in it for you?

If you are a equity investor: I am sure you had a good day today and at ease compared to the last few weeks. But dont’t get too much optimistic. It’s a short fix for the next 90 days and nothing is confirmed. This talk in Geneva is not final and many more discussions are yet to come. US is still stubborn to give china a tough battle with a hope to reduce trade deficit.

For market in general: There is a signal for market resilience. This meeting surely changed the ground for bond and equity market and created a shift. 10-Year Treasury Note: Increased by almost 6 basis points, reaching 4.45%, marking it the highest in the month as said before. Despite global uncertainties retailers are counting on stocks which could only go in either way.

Conclusion for the day:

While the trade-talk is temporary, it still sending positive signal to the global market which could benefit the the global trade. The sense of co-operation is growing in international trade. On the darker side, if the talk fails or delay trump could increase the tariff again. This time maybe not 145% but 60% what he promised in the campaign which could again make the stock chart red!

Some good reads for you

Trade War Truce Leaves 30% Tariff On China In Place—Why It Matters

Wall Street surges after US, China agree to slash tariffs for 90 days in pivotal thaw of trade tensions

Treasury yields jump, Fed rate cut expectations pushed back