Dow Jones Futures Soar On Trump Xi Meeting China Trade War Cease-Fire

Dow Jones futures soared Sunday night, along with S&P 500 futures and Nasdaq futures following a tariff truce at the Trump-Xi meeting. President Donald Trump and Chinese President Xi Jinping on Saturday agreed to halt new tariffs and avoid escalating the China trade war. The Trump-Xi meeting outcome puts on hold higher Trump tariffs on Chinese goods, including possible duties on the Apple (AAPL) iPhone. A China trade war cease-fire could be good news for Apple stock, Tesla (TSLA), Deere (DE) and U.S.-listed Chinese stocks such as Alibaba (BABA). Chipmakers, perhaps notably Qualcomm (QCOM) and NXP Semiconductors (NXPI), also could benefit.


The positive Trump-Xi meeting comes after dovish comments by Fed Chairman Jerome Powell fueled the best weekly gains of 2018 for the Dow Jones, S&P 500 index and Nasdaq composite. Fed Chairman Powell said late Wednesday that interest rates are “just below” neutral.

Dow Jones Futures Today

Dow Jones futures jumped 1.9% vs. fair value. S&P 500 futures raced 1.75% higher. Nasdaq 100 futures ran up 2.25%. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular stock market session.

Crude oil futures jumped about 5% as Saudi Arabia and Russia agreed to extend their pact to manage crude prices. Traders expect a production cut by OPEC and Russia at a key meeting this week.

On Monday, the New York Stock Exchange will hold a minute of silence for former President George H.W. Bush. On Wednesday, the NYSE and Nasdaq stock markets will close for Bush’s funeral. Bond markets also will close. Traditionally U.S. stock markets close for the funerals of former presidents.

Trump Xi Meeting

U.S. will refrain from raising existing tariffs on $200 billion of Chinese goods from 10% to 25% on Jan. 1 as previously planned on 10%. The U.S. wants talks to start right away on Chinese trade practices that even Trump critics agree are significant problems: intellectual property theft, non-tariff barriers and cyber theft. After 90 days, if there’s no progress on these fundamental issues, the U.S. will raise those tariffs to 25%, White House Press Secretary Sarah Huckabee Sanders said in a statement after the Trump-Xi meeting.

China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the U.S., she said. Beijing will restart purchases of U.S. farm goods right away after cutting off U.S. soybean buys amid the U.S.-China trade war. That could be good news for farmers, agricultural commodities and related companies such as farm equipment giant Deere. Deere stock hit a 52-week low on Oct. 29, when the S&P 500 index bottomed, but has moved higher, reclaiming its 50-day and 200-day lines last week.

China Trade War Truce Positive For Apple Stock, Tesla Stock

Apple stock was by far the biggest loser on the Dow Jones in November, tumbling 18.4% and hitting a seven-month low. Apple stock lost its crown as the world’s most valuable company to fellow Dow tech stock Microsoft (MSFT) on Friday. Most of that sell-off was due to Apple’s weak holiday guidance and a slew of iPhone suppliers warning of weak demand. But Trump’s threat to impose a 10% tariff on iPhones imported from China did not help Apple stock.

Meanwhile, Tesla is dealing with China’s now-40% tariff on imported U.S. vehicles. That puts Tesla at a disadvantage to locally made vehicles and cars imported from other countries. The electric car maker plans to build a plant in Shanghai, but China tariff relief would be a much more immediate boost. Tesla stock is  working on a 366.85 cup-with-handle buy point, according to Marketsmith analysis. Tesla stock closed Friday at 350.48.

A China trade war truce also could be good news for U.S.-listed Chinese stocks. Alibaba stock rose 13% in November, reclaiming its 50-day moving average. Alibaba stock, which is performing better than many other Chinese internets, is still 24% below its June 14 peak.

The Shanghai composite rose nearly 3% intraday Monday, while the yuan also climbed.

Xi Open To Qualcomm-NXP Semiconductors Deal

Xi also said he’d considered approving a revived Qualcomm acquisition of NXP Semiconductors, the White House said in a statement. The canceled $44 billion Qualcomm-NXP Semiconductors deal was the highest-profile victim of the China trade war.

It’s unclear if Qualcomm and NXP Semiconductors would try again. Keep in mind, if U.S.-China trade talks sour again, Chinese regulators could once again block a Qualcomm-NXP Semi merger.


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Originally posted 2019-09-19 23:27:00.


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