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In the past five days, amid reports of the US Federal Reserve's reluctance to raise interest rates, the Dow Jones broke the 26,000 mark for the first time since March 1st.
The Dow suffered early last week due to the mbadive sell-off of the Boeing stock, which would have cost the Dow more than 300 points, but it briefly exceeded 26,000 points on March 19, showing signs of a short term potential. rally.
While the Dow Jones index fell slightly to 25,887 points, the WSJ said Tuesday that US and Chinese negotiators had scheduled meetings with the aim of concluding a comprehensive trade deal. here the end of April.
The new development of trade negotiations between the United States and China and the Fed's patience to raise rates could boost investor confidence in the US market.
Dow at a significant level of resistance
Since December 2018, in less than four months, the Dow has seen an impressive recovery from 21,792 points to 25,887 points, recording growth of 18.79% over a relatively short period.
The Dow and the US stock market stagnated last month and some badysts have attributed the lack of activity in the US market to rapidly rising share values and the lack of appetite of retail investors to invest in the market. a result.
Fundamental factors remained strong in the US market throughout March, as consumer confidence, wages and productivity growth increased significantly in recent months.
Jobs Report: The most important point
Non-supervisory wages continue to rise and exceed total wage increases
It's an incredible news for all Americans#Winner pic.twitter.com/FBGnPXPgHo– Charles V Payne (@cvpayne) March 8, 2019
"The data indicate that real consumption will grow by 2.6% in 2019. The gap explaining the discrepancy lies in the way households rate their personal finances, with low-income households expressing much more positive appreciations," he says. Richard Curtin, badociate professor at the University of Michigan Research Center survey, said.
Given the optimistic fundamentals underlying the recent upward movement of the US stock market, significant progress in the US-China trade agreement could boost investor sentiment in the market.
The main problem that has delayed trade negotiations between the two countries would be efforts by the United States to protect the intellectual property of their companies operating in China.
Earlier this month, it was reported that no trade negotiations had taken place for more than two weeks, probably due to the reluctance of both parties to compromise on industrial policy changes. .
US President Donald Trump said on March 14:
I think things are going very well – we'll just see what the date is. I'm not in a hurry. I want the contract to be fair. … I'm in no hurry whatsoever. This must be the right agreement. This must be a good agreement for us and if it does not, we will not do it.
What is the potential obstacle in the application of trade agreements?
China has recently experienced a slowdown in its domestic market, and reports have suggested that stimulus measures introduced by the government could have a smaller than expected impact on China's economic growth.
"If stimulus measures in China still have a significant impact or on the rest of the world, it depends mainly on the extent of these measures," said Wang Tao, chief economist at UBS for China, at the WSJ .
A full agreement with the United States could have an immediate effect on the Chinese domestic market but the United States would aim for a gradual elimination of tariffs.
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