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Trade Deal Props Up Stock Markets

Global stocks gained on Monday after the news of a preliminary trade deal between Washington and Beijing.

European shares started with the previous weeks’ gains. The Pan-European STOXX 600 index gained 1.2%, reaching a record high.

Over in Germany, the DAX gained 0.6%.

In Britain, the FTSE 100 index gained 1.14%, moving alongside the powerful British pound that gained 0.3%.

The increase added to gains last week after the landslide victory for the Conservative Party and Prime Minister Boris Johnson.

For US stock trading, futures also indicated stronger gains to kick off the week. S&P 500 e-minis gained 0.36%.

Over in Asia, MSCI’s broadest index of Asia-Pacific shares ex-Japan rose to its highest level since April 18. It gained as high as 0.14%.

In Australia, S&P/ASX 200 led the way as it gained 1.63%. Shares in Taiwan gained 0.1%.

In Japan, the Nikkei 225 fell 0.29% after gaining 2.55% to a 14-month closing high last week.

Reactions in China had been more tepid, although the CSI300 index was higher and last traded 0.5% up.

Preliminary Trade Deal

Serving as a good piece of news for the stock market, US Trade Representative Robert Lighthizer over the weekend that a deal was “totally done.”

This “phase one” deal prevented the US from imposing another round of tariffs on $160 billion Chinese imports. Initially, the tariffs were to take effect on December 15.

At the same time, the US agreed to halve the tariff rate on $120 billion worth of Chinese goods to 7.5%.

According to one analyst, the deal was definitely good news. However, he also said that “we can’t celebrate yet.”

This analyst said that the agreement would largely hinge on how much the Chinese would comply. Stock traders need to know that the trade deal will also tackle technical issues, technology, and many more.

The trade dispute has been going on for 17 months. This trade row has taken a toll on global economic growth.

On the tariff front, analysts agree that there were expectations of a bigger tariff rollback.

Last Friday, US stock trading was cautious. But the news of the deal bolstered the S&P 500 to record a closing high of 3,168.9, or 0.01% higher.

The NASDAQ Composite gained 0.2% to finish at 8,734.88. Meanwhile, the Dow Jones Industrial Average gained 0.1% to 28,135.38.



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