After the biggest weekly stock decline in two years last week, stocks roared back into the green on Monday, with major benchmarks jumping nearly 3%, while Treasury yields climbed.
The biggest story driving the turnaround was talk that the White House was ready to strike a deal with China on trade.
Founder of the world’s biggest hedge fund, Ray Dalio, echoed Asia Unhedged’s impression that Trump’s threat of tariffs, which have not been detailed or imposed yet, was just a bargaining position.
Trump’s move on trade is “modest and appears significantly politically motivated,” Dalio said in a Linkedin Post. It “could be a negotiation tactic and a political move that needn’t mean a trade war is likely.”
Chipmakers and financials led gains, on headlines such as these:
“China offers to buy more US semiconductors to cut trade surplus” (Reuters)
“U.S. Pushes China on Cars and Finance in Tariff Talks” (Bloomberg)
A negotiated settlement between the White House and China on trade is by no means guaranteed, but Trump’s oft-cited metric for judging his success as president – the stock market – sent him a strong message today: make a deal with China.