Immediate agreements that are unlikely to happen
Liqian Ren, who leads the Modern Alpha division at WisdomTree Asset Management, expressed that both the US and China are aiming or perhaps even needing to finalize a deal. Still, she mentioned that at this early phase, there doesn’t seem to be much motivation to act swiftly.
“Both sides are likely waiting to see how the other manages the existing challenges,” Ren noted.
“Currently, the market might be a bit overly optimistic about what can be accomplished by China and the US and how quickly things might progress.”
Last month saw a rise in trade tensions, as the US increased tariffs on all imports from China to an astonishing 145%, prompting China to retaliate with a tax hike on US imports to 125%.
On Friday, remarks suggesting that 80% tariffs on Chinese products were “appropriate” led to the introduction of an alternative to the 145% tariff, creating some optimism around resolving the conflict.
The S&P 500 Index has already bounced back from the unexpected downturn following the tariff announcement made on April 2. Yet, companies continue to caution investors about the repercussions and uncertainties linked to these tariffs.
At present, the S&P 500 sits about 8% lower than its peak in February, translating to around a 4% annual drop.
In the midst of tariff-related disruptions, various consumer sentiment surveys and other softer indicators have raised alarms regarding US economic growth, although most economic figures suggest a degree of resilience.
