Global markets are rallying on trade optimism after the U.S. and China released a preliminary agreement.
HK 50 – Daily Chart
The price of HK 50 has the October high in its sights after finding support at the March around 24,907. That will be the important support level going forward.
The U.S. and China have released a framework for a potential trade deal that will be discussed when their leaders meet this week, according to the U.S. Treasury Secretary.
Scott Bessent said a “final deal” on TikTok and a deferral on China’s tightened controls on rare earth minerals would be included. He also noted that he did not expect the 100% tariff on Chinese goods threatened by President Trump, while China will resume substantial soybean purchases from the U.S.
Both nations are looking to avoid further escalation in a trade war between the world’s two largest economies. Thursday is the date set for the talks and that will be a day after the U.S. FOMC interest rate decision, where the market is expecting a rate cut of 25bps.
Bessent said the countries had “reached a substantial framework for the two leaders,” and “the tariffs will be averted”.
A Chinese government statement said that both negotiating teams “reached a basic consensus on arrangements to address their respective concerns”.
“Both sides agreed to finalise specific details further,” they added.
Hong Kong’s stock market got another boost from news that Huawei’s EV partner was seeking an IPO. The move is expected to raise $1.7 billion and add to the Hang Seng exchange’s record year of deals.
Stocks can continue higher this week if the trade deal remains on track.
