Reports of a possible delay in a China-US trade agreement between China and China overshadow the ugly stock market downturn in May for some investors.
MarketWatch respondents surveyed on Wednesday still hope that President Donald Trump will sign a partial trade deal to resolve the longstanding tensions between the world's largest economies.
"To date, the market has not been impressed by the coming and going of comments and reports, but I think that [situation] is more like May than December," said Art Hogan, chief strategist at National Securities, opposite MarketWatch , Referring to the worst trading day on the trading day before Christmas in history in 201
Markets fell sharply on Wednesday after Reuters announced that a phase-1 pact, which was hoped for within weeks, could reach 2019 as Beijing pushes for wider tariff reductions, and the Trump administration countered with own demands. CNBC also reported that there are disagreements between the US and China over certain tariffs that would expire if they attempt to reach an agreement.
Even before the news, Sino-US trade relations were tightened. This was highlighted in a report in the Wall Street Journal which pointed to conversations against a wall. In the meantime, the Senate approved a bill to support human rights in Hong Kong after months of unrest in the semi-autonomous Chinese city. China responded with the threat "to take strong countermeasures" if Congress continues to pass the law.
Trade has been a major driver of market fluctuations over the last two years.
Already in May, the S & P 500 was in use
recorded an increase of more than 2% over a two-day period, the Nasdaq Composite Index
lost 2.5% and the Dow Jones Industrial Average
lost 500 points during the same period, after Trump's tweet of May 3 indicated that tariff tensions between the US and China were worsening ,
Hogan says the market is unlikely to see a sell-off in May as the Federal Reserve cut interest rates three times this year and refuses to raise interest rates in the face of trade soon.
Other strategists also expressed optimism about a partial or meager business, especially as investors speculate that Trump would support measures that support the economy and seek re-election in 2020 presidential race.
"We've been up and down a few times, so I still think it's an unlikely scenario – remember, we're close to a holiday season and an election year," wrote J.J. Kinahan, chief strategist at TD Ameritrade
AMTD, + 1.82% ,
in comments sent by e-mail.
However, the time has come to impose 15% tariffs on imports of around $ 160 billion in China, including mobile phones and toys, which are likely to hit US consumers directly.
Kinahan said that "if the December 15 tariffs come into force, there could be some impact".
However, he compared the dust on the trade in a "playground fight" in which there are "many" tough talks, without anything happening in one way or another.
Michael W. Markelli, market strategist at investment bank Robert W. Baird & Co., said the market may be more resilient in the bumpy phase of trade negotiations, as investors may be decoupling for a long slog.
"If the deal breaks down and tariffs are raised in December, it would probably look like someone who drinks sour milk," he said. "But while the initial reaction is sharply negative, one eventually gets over it," said Antonelli.
The Baird strategist said that the market has been driven more by consumers, although economic data has revealed signs of weakness in the manufacturing sector and threatened US economic growth in the eleventh year.
Nonetheless, Gregory Daco, head of the US The economist at Oxford Economics expects the economic outlook to worsen in 2020 with or without a tight trade deal. He believes that a likely lack of substance in relation to such an agreement would still be a strategic challenge for companies wishing to develop business investment plans.
"There would be evidence of some easing, but there are pending fears on the part of companies that tariffs may return and they may rise," he said.