U.S.-China Trade Talks Lift Hopes Ahead of Trump-Xi Meeting, Will A Market Rally Follow?

The U.S.-China trade tensions are showing signs of easing following high-level economic talks in Kuala Lumpur. Investors are now eyeing potential catalysts that could drive the next wave of market momentum.

U.S. and China Hold Constructive Trade Talks

On Saturday, Chinese and U.S. delegations met to discuss trade and economic issues. The talks were described to be constructive and are expected to continue tomorrow. 

The meeting marks the latest effort to ease the tensions between the U.S. and China after months of tariffs and countermeasures. This is also aimed at laying the groundwork for a meeting between Xi and President Trump on Thursday during the Asia-Pacific Economic Cooperation summit in South Korea. 

The White House recently confirmed that Trump and Xi will meet later this month in Washington, their first in-person meeting since Trump returned to office. Trump said he and Xi have plenty to discuss and expects both sides to compromise. 

“They have to make concessions. I guess we would too. We’re at 157% tariff for them. I don’t think that’s sustainable for them, and they want to get that down, and we want certain things from them,” he said. 

Key Points of Contention Between U.S. and China

Bloomberg reports that, Trump has said he is willing to keep higher tariffs on Chinese goods on hold if Xi agrees to resume buying U.S. soybeans, crack down on fentanyl, and ease restrictions on rare-earth exports.

Earlier this month, he criticized Beijing’s plan to expand controls on rare-earth elements, raising the prospect of imposing steep tariffs on Chinese goods and even canceling his first meeting with Xi.

The trade truce is set to expire on Nov. 10 unless extended. Meanwhile, the recent weeks have seen tensions flare between the U.S. and China. The new U.S. restrictions on Chinese ships and tariffs have shaken up the relationship. China responded with similar measures, tightening export controls on rare earths and other key materials.

Experts say that the U.S. and China must resolve disputes over tech export curbs and rare earth controls, key leverage for China. While a deal could ease the tensions, failure to compromise could lead to a sharper escalation.

Will a US-China Deal Spark the Next Market Rally?

Recent developments in the trade talks have been closely watched by global markets. Investor Ted Pillows notes that the latest CPI report met expectations, giving a small boost to markets. Stocks surged to new highs, but cryptocurrencies like Bitcoin continue to struggle, drifting lower despite the rally in equities.

He also notes that with the probability of an interest rate cut now at 98%, traders have likely already priced in that policy shift. This raises the question of what could drive the next major move in markets — whether it’s a breakthrough in U.S.-China trade negotiations, a new round of quantitative easing (QE), or some other major catalyst.

Stay tuned for further updates!