US-China Trade Talks Impact: Wall Street in Purgatory, Rare Earths in Play
Stock market anticipation halted by US-China trade negotiations discussions
The ongoing trade discussions between the US and China left Wall Street mostly unfazed on Monday, as investors remained cautious amid uncertainties. The Dow Jones Index, the Nasdaq, and the S&P 500 stayed relatively flat, with the Nasdaq enjoying a slight 0.3% growth.
The US-China trade meetings commenced on Monday afternoon and are anticipated to continue into Tuesday, with the USendeavoring to reach a basic agreement on rare earths[1]. While China has remained tight-lipped about the matter, investment expert Peter Cardillo suggested, "I believe there will be a compromise deal, but at least a deal. That would alleviate some of the uncertainty around tariffs."
In the rare earths sector, China maintains a monopolistic control, making this strategically significant. The high stakes of this trade talks resonated in Asia, with stock markets posting gains[1].
Chip stocks were the week's winners, with Qualcomm and AMD each rising around 4%. Investment strategist Kim Forrest explained, "China's investments in artificial intelligence (AI) could benefit the sector if other countries are once again allowed to supply their products there."
However, the U.S. dollar showed signs of weakness, dropping 0.2% against a basket of currencies to 98.973 points. Simultaneously, the gold price surged 0.5% to $3,327 per troy ounce[1]. UBS analyst Giovanni Staunovo commented, "Trade tensions, debt concerns, and weak economic growth are expected to persist and continue to support gold in the coming months."
While the US and China's trade relations remain uncertain, concerns were also raised by economic data from China. China's exports grew at their slowest pace in three months in May due to the ongoing trade conflict with the US, and imports also plummeted[1]. The Chinese economy is currently grappling with headwinds from the US trade conflict and a slowdown in the real estate sector.
Meanwhile, in the aviation sector, new U.S. decrees bolstered shares of flying taxi developers such as Joby Aviation and Archer Aviation, each gaining more than 10%. However, Robinhood faced a 2% dip after regulatory hurdles impeded its anticipated inclusion in the S&P 500[1]. Despite that, Apple slipped 1.2%, with an analyst expressing dissatisfaction over a lack of significant advancements regarding artificial intelligence at their developer conference.
[1] Data source: ntv.de, gut/rts/DJ.
The Commission, being a part of the European Union, has also been involved in the preparation of the draft budget, considering the impact of the US-China trade talks on finance and business sectors, such as investments in technology and general-news, like the rare earths sector. Peter Cardillo, an investment expert, predicts a compromise deal in the US-China trade talks, which may alleviate some of the uncertainty around tariffs. The gains in Asia's stock markets and the surge in gold price highlight the high stakes of these trade talks, especially in areas like rare earths where China maintains a monopolistic control.
