US stocks rebounded from the early sharp decline in overnight trading on Wednesday after the report indicated that the US-China trade war might make progress. According to Bloomberg News, the White House may suspend tariff increases that were scheduled to take effect next week. In addition, it may implement the currency deal with China that was previously agreed. Bloomberg said that these measures would be part of the first phase of the agreement with China. Further negotiations on key issues such as intellectual property rights and compulsory technology transfer will be carried out later in the second phase.
According to the New York Times report last night, President Donald Trump has approved the licensing of some US companies to conduct business with China Telecom giant Huawei Technologies. The US blacklisted the telecom giant earlier this year. The sale of non-sensitive products may help to ease trade tensions. This news came before the first face-to-face trade negotiations of high-level between the US and China since July. On Thursday, Mr. Liu He, Vice Premier of China will meet with Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Washington. These reports are gratifying news for futures traders who responded to bad news hours ago.
Dollar dips as the trading session opened since the report showed that the US-China trade negotiations had “no progress” in resolving the trade war. The Hong Kong English newspaper “South China Morning Post” reported on Wednesday evening that the negotiations that laid the foundation for high-level negotiations this week did not make progress on key issues. The main negotiation meeting has been shortened from two days to only one day. Also, the Chinese delegation is scheduled to leave Washington after the meeting on Thursday. According to reports, China refuses to consider changes to forced technology transfer, which is a main concern of the US. After the release of news, Dow Jones Industrial Average futures YM00 (-0.10%) fell immediately around 1% or 300 points. Nasdaq Composite futures NQ00 (-0.07%) and S&P 500 futures ES00 (-0.12%) at one point were also down by more than 1%. However, these losses were eliminated after the reports of Bloomberg and Time. As of 10:40 pm Eastern, all three stocks contracts fell back to nearly zero.