Dow Preps Positive Open After China Trade Deal 'Cacophony'

Markets are buoyed with renewed bullish sentiment over a trade deal with China. | Source: REUTERS/Brendan McDermid

The Dow Jones is expected to open with a gain of over 50 points in anticipation of a new round of trade talks in October between the U.S. and China.

The Dow Jones is still near its record high despite lagging progress in the trade talks (source: Yahoo Finance)

While the tension between the U.S. and China has intensified in recent weeks following the imposition of additional tariffs by both sides, some strategists expect the next round of trade talks to lead to a “breakthrough.”

Why a breakthrough is crucial for the Dow

Hu Xijin, the editor-in-chief of Chinese and English editions of the Global Times, who has mostly portrayed a negative stance towards the progress of the trade talks throughout 2019, said that the probability of a breakthrough between the U.S. and China has increased.

He said:

“China and the US announced new round of trade talks and will work to make substantial progress. Personally I think the US, worn out by the trade war, may no longer hope for crushing China’s will. There’s more possibility of a breakthrough between the two sides.”

I can’t tell whether Mr. President is threatening China or pleading with China to make concessions. What’s important is that China always wants to reach a deal, but will always reject bullying demands. China and the US need mutually respecting and fair negotiations.

— Hu Xijin 胡锡进 (@HuXijin_GT) September 3, 2019

Strategists believe that the progress of the trade talks are now mostly priced into the markets and minor developments are unlikely to sway the Dow Jones and equities markets in the short term.

A comprehensive deal, however, could affect

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