Dow Rallies 200 Points as Trump's Tough China Tactics Bear Fruit

The Dow Jones rallied on Wednesday amid global risk-on trading as tensions eased and the trade balance showed Donald Trump’s China tactics may be working. | Source: REUTERS / Carlo Allegri

Wednesday brought a welcome relief rally for the Dow Jones, which surged more than 200 points as risk assets rallied around the globe.

Tensions eased in Hong Kong, Brexit no-deal risks fell, and President Donald Trump confirmed that the US was not looking for regime change in Iran.

Adding to the bullish mood, new data revealed that the US-China trade balance is on track to shrink to a six-year low.

Dow Jones Recovers as Investors Celebrate Easing Tensions

Heading toward the closing bell, the Dow Jones Industrial Average had rallied 217.10 points or 0.83% to 26,335.12.

The Dow Jones rose strongly on Wednesday amid a global risk-on rally. | Source: Yahoo Finance

The Nasdaq and S&P 500 both rose alongside the Dow. The tech-heavy Nasdaq gained 1.17% to trade at 7,966.29, while the S&P 500’s 0.98% jump carried the large-cap index to 2,934.74.

Crude oil – a tremendous indicator for the global growth outlook – surged 4% in risk-on trading conditions.

Trump Triumphant? US-China Trade Deficit Narrows

There is no question that the Dow has not enjoyed the recent escalation in the US trade war. A tremendous bout of volatility ensued as both the US and China increased tariffs, but there are signs that Trump’s tactics might be working.

Just look at today’s US trade balance data:

Donald Trump’s tariffs could be narrowing the US-China trade deficit. | Source: Think ING

ING Chief International Economist James Knightley follows the US-China trade balance closely, and he said that he sees clear evidence of progress because the deficit is narrowing.

In the background, Knightley does see

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