Published: Fri, September 06, 2019
Markets | By Otis Pena

US Stocks Soar After Announcement of New Trade Talks With China

US Stocks Soar After Announcement of New Trade Talks With China

In their latest escalation, Washington imposed 15% tariffs on $112 billion of Chinese imports Sunday and is planning to hit another $160 billion December 15 - moves that would extend penalties to nearly everything the United States buys from China.

Commerce Minister Zhong Shan, People's Bank of China Governor Yi Gang and Ning Jizhe, the deputy head of the economic planning commission, were also on the call, according to the commerce ministry statement.

US private payrolls increased in August at their fastest pace in four months, according to ADP, blowing past analyst estimates ahead of Friday's more comprehensive jobs report from the Labor Department.

The new round of talks will be seen as a sign of optimism in a trade war that has weighed on the global economy and shaken diplomatic relations between the two global powers.

Xinhua also reported that working groups of both sides would conduct preparatory meetings "in earnest" as soon as in a week, "to create favorable conditions to achieve substantial progress" for the high-stakes talks in DC.

Trump and Chinese President Xi Jinping this summer agreed the United States would ease restrictions on Huawei Technologies and China would make unspecified purchases of USA farm products.

Asian markets have reportedly rallied in response to the news, with stocks in Tokyo and Shanghai advancing 2.3% and 1.5%.

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The 35% punitive tariff being charged by China is being added to the combined 27% in taxes (duty + value-added tax) the country had already been charging for years for imported U.S. squid to enter China, as one squid industry source explained. The news comes just days after China announced it had filed a lawsuit with the World Trade Organization (WTO) on Monday (Sept. 2), the day after the newest tariffs went into effect.

"Lead negotiators from both sides had a really good phone call this morning", ministry spokesman Gao Feng said in a weekly briefing.

Analysts noted that investors remain nervous and markets could react with volatility on comments or actions from either side.

Meanwhile, US services sector activity accelerated in August and private employers boosted hiring, suggesting the economy continued to grow at a moderate pace despite trade tensions which have stoked financial market fears of a recession.

China and the USA are locked in a fierce trade dispute. -China talks sent U.S. Treasury yields higher on hopes a trade deal might remove an impediment to growth.

New tariffs on US and Chinese imports and uncertainty about whether there would be another high-level meeting have rattled investors' nerves in recent months.

China, for its part, has been stung by Washington's failure to make good on its promise to ease restrictions on Chinese tech giant Huawei Technologies Co. Ltd. While Trump's administration ratchets up the tariff pressure, China is having to add stimulus to support its slowing economy.

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