The United States and China have agreed to hold off new tariffs, sending the stock market higher. In fact, receding possibility of any collateral damage from the trade war helped industrial and technology stocks gain in particular. Thus, investing in such stocks seem to be a wise move for now.
What’s Driving the Markets?
The broader stock market recently enjoyed a healthy run, with the Dow Jones Industrial Average seeing its best June in more than 80 years. The blue chip index rose 7.2%, according to Dow Jones Market Data. Also, the S&P 500 and Nasdaq notched record June returns.
No doubt, the rally was partly supported by Fed’s easier monetary policy stance along with the U.S.-China trade truce. U.S. President Donald Trump and Chinese President Xi Jinping met over the weekend at the G-20 summit in Japan, where they have mutually decided not to impose tariffs against each other’s commodities.
Trump said that no additional tariffs on billions of dollars of Chinese products will be applied for the ‘time being.” Also, the economies will surely work a deal. To top it, six weeks after Huawei was blacklisted by the White House, Trump took a complete U-turn. He said that the U.S. companies “can sell their equipment to Huawei.” This development certainly eased trade dispute since it was one of the major flash point in the conflict.
Potential Winners as U.S.-China Work Out Trade Truce
A truce between two of the world’s largest economies has alleviated risks in the equity market for now. A full-blown trade war would have had rippling effects on the global economy growth, casting a pall over businesses. Let us now look at stocks that have benefitted from the easing trade tensions:
Industrials Tread Higher
As mentioned earlier, progress in trade talks has helped the Dow