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Can ceasefire in the US-China trade war support Wall Street markets?

The ceasefire in the US-China trade war brings optimism to investors, but the economic calendar for the current week is quite busy and moods can change.

US-CHina trade war

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Wall Street stock market futures surged after US President Donald Trump and Chinese President Xi Jinping agreed to a 90-day ceasefire in the trade war that has weighed heavily on global stock markets for most of 2018. The futures on the Dow Jones Industrial Average indicated an open of about 475 points as of 5.50 a.m. ET Monday, while S&P 500 futures had an implied positive open of 52.5 points and Nasdaq seen more than 180 points higher.

The United States and China have reached a 90-day cease the trade war at the meeting of Donald Trump and Xi Jinping at the sidelines of the G-20 summit in Buenos Aires. The US President has agreed not to raise the tariffs of Chinese imports from 10% to 25% as he threatened. China has agreed to buy a still uncontroversial, but a significant amount of agricultural, industrial, energy and other US goods to curb the huge trade imbalance between the two countries

The good news on the trade front encouraged the investors and pushed the markets up with European and Asian stocks increasing significantly at the beginning of the week.

The US President Donald Trump said the Chinese authorities have agreed to “reduce and eliminate” duties on imports of US-produced cars.

The statement by the head of state, which has not yet been confirmed by Beijing, was made shortly after his meeting with his Chinese leader Xi Jinping within the framework of the G20 summit. The two of them agreed a cease-fire in their trade conflict within 90 days during which Washington would not increase its duties on Chinese imports, and in turn, Beijing agreed to resume its purchases of some US agricultural and energy products.

Upcomming economic callendar

On Monday, December 3, the markets will watch the Japanese PMI and Bank of Japan outrighting bond purchase program. The ECB President Mario Draghi and ECB Executive Board Member Benoit Coeure participate in Eurogroup meeting in Brussels, which may give a signal for the change in the monetary policy. In Europe will be released the PMI on manufacturing. The Federal Reserve representatives Randall Quarles and Robert Kaplan will participate in a moderated question-and-answer session on the economic outlook, inflation, and monetary policy.

On Tuesday, December 4, the ECB Vice President Luis de Guindos participates in ECOFIN meeting in Brussels. The governor of the Bank of England, Mark Carney, will speak to lawmakers about the potential impact of the UK-EU Brexit deal ahead of parliament’s vote expected later in December. Federal Reserve Bank of New York President John Williams will give opening remarks and participates in a panel on local employment and labor force trends in New York.

On Wednesday, December 5, the ECB President Mario Draghi and the ECB Chair of the Supervisory Board Daniele Nouy will deliver speeches on “Promoting safe and sound banks in the SSM” at ECB colloquium. Later they will speak at a conference on bank supervision. The Bank of England will publish its final full assessment of the health of Britain’s banks and broader financial system before the country leaves the European Union. In the US, the Federal Reserve will issue the Beige Book of economic condition.

On Thursday, December 6, the Federal Reserve Chairman Jerome Powell will give brief welcome remarks before the Housing Assistance Council Rural Housing Conference.

On Friday, December 7, the markets will expect the EU industrial production and labor costs data, while the US will release unemployment and payroll figures.

Upcomming Coprporate reports

The corporate season is at its end with fewer companies posting their quarterly and annual financial statements.

On Monday, December 3, will be posted the earnings statement of the technology platform for Business Spend Management Coupa Software and offshore ultra-deepwater drilling company Pacific Drilling.

On Tuesday, December 4, will be released the quarterly reports of Bank of Montreal, Christopher & Banks Corporation and Dollar General Corporation. During the day the markets will wait for the quarterly report of Hewlett Packard Enterprise and Marvell Technology Group.

On Wednesday, December 5, will be posted the report of National Bank of Canada, Laurentian Bank of Canada, as well as software developer
Verint Systems.

On Thursday, December 6, the markets will wait for the finance report of retailer Kroger, the engineering and manufacturing company Methode Electronics and offshore supplier Thor Industries. However, the key event for the day will be earnings statement of chip manufacturer Broadcom.

On Friday, December 7, will be published the finance reports of Oil Dri Corporation of America and Ocean Power Technologie.