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#1 01-07-2019 17:17:53

johnedward
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US-China: JP Morgan notes that optimism may continue a few months

US-China: JP Morgan notes that optimism may continue a few months following truce


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Investors have been pleased ever since the United States and China agreed, at least temporarily, not to increase trade tensions. This market optimism will last for a few months, according to one of J.P. Morgan Chase's executives.

US President Donald Trump and Chinese President Xi Jinping met this weekend at the G-20 summit in Japan, where they agreed not to impose any further tariffs on their respective products. This news has pushed most stock markets in the Asia-Pacific region higher today, with mainland Chinese equities leading the gains.

"I think that for the moment, the markets have taken a more optimistic and positive tone at least since this weekend. And I think this optimistic tone will continue over the next two months," said Jing Ulrich, Managing Director and Vice President of Global and Asia Pacific Banking Services at J.P. Morgan Chase.

She explained that developments over the weekend had temporarily dissipated uncertainty facing the global economy. This will allow investors to focus on other factors affecting equity performance, such as corporate profits and reforms of the Chinese economy, Ulrich told the World Economic Forum in Dalian, China.

Investor sentiment will also benefit from the increased willingness of central banks to ease monetary policy, Ulrich said. According to her, interest rate cuts by major central banks such as the US Federal Reserve and the European Central Bank can help to "reverse some of the negative economic trends" caused at least in part by the trade war.

Nevertheless, Jing Ulrich pointed out that the United States and China have not reached an agreement to resolve their tensions. This means that investors still have to monitor the progress of negotiations between the 2 countries in the coming months.

"Investors must choose the sectors where earnings growth is strongest. Ultimately, equities are driven by profit growth. The macroeconomic environment is important, but corporate fundamentals may be even more important," she added.


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