Futures climb as Mnuchin talks of '90pc done deal'

Top News | REUTERS 27 Jun 2019

US stock index futures rose yesterday after Treasury Secretary Steven Mnuchin said the United States and China were close to reaching a trade deal, with strong results from chipmaker Micron adding to the upbeat mood.

"We were about 90 percent of the way there [with a deal] and I think there's a path to complete this," Mnuchin said in an interview with CNBC. He did not provide details on what the final 10 percent of an agreement might entail.

Mnuchin said he is confident President Xi Jinping and US counterpart Donald Trump can make progress in stalled trade talks at the G20 meeting this weekend.

"The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the US economy to get balanced trade and to continue to build on this relationship," he continued.

"I'm hopeful that we can move forward with a plan President Trump and President Xi have a very close working relationship. We had a productive meeting at the last G20."

Onshore yuan rose 38 basis points to 6.8760 after the Mnuchin interview, while offshore yuan advanced 71 basis points to 6.8775 last night, and Hang Seng Index Futures traded 222 points higher to 28,412.

The three main Wall Street indexes fell nearly 1 percent on Tuesday after Federal Reserve chairman Jerome Powell pushed back on pressure from Trump to cut interest rates. However, traders still fully expect a rate cut from the Fed in July and see a 25 percent possibility of a half-point move.

Experts said while the Trump-Xi meeting will unlikely result in a deal this weekend, it could open more opportunities for negotiators to come up with a solution to finalize a deal.

Trump said yesterday he would impose additional tariffs on China if he did not reach a trade deal with Xi.

"I would do additional tariffs, very substantial additional tariffs, if that doesn't work, if we don't make a deal," Trump said in an interview with Fox Business Network.

He left open the possibility that the two leaders could make a deal to avert further tariffs.

Meanwhile, more than 50 percent of Chinese consumers responding to a survey said they are avoiding buying anything made in the United States as the trade war escalates.

The poll, conducted by London-based advisory firm Brunswick, questioned 1,000 Chinese consumers and 56 percent said they had avoided US products, while 68 percent said their opinion of American firms had become more negative.

"This poses a significant bottom line risk to US companies as three in four Chinese consumers say they often buy products from American businesses," Brunswick said.

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