US - China Finally On Agreement?

U.S.–CHINA NEGOTIATIONS

This past Sunday, top officials from the U.S. and China sat at the same table and reached a framework for a trade agreement, which Presidents Trump and Xi are expected to formally sign later this week on the sidelines of the APEC summit in South Korea — a meeting that’s being watched very closely.
If the deal goes through, it would mark an extension of the trade truce between the world’s two largest economies, preventing a new escalation that many had feared.

What does this agreement include?
A suspension of the new 100% tariffs that Trump had planned for November 1st. A freeze on China’s new export-control regime for rare earth elements — materials that are critical for technology, defense, and manufacturing. And a series of other issues: the future of TikTok, port fees, the opioid crisis, and China’s purchase of U.S. soybeans.

And to understand the importance of rare earths: China controls more than 90% of global production. These materials are used in everything — from electric vehicles and microchips to satellites, airplanes, and defense systems. If the flow of these raw materials were cut off, it would cause serious disruption across global industry. That’s why this topic carries so much weight.

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MARKET REACTIONS

You might be wondering: “How did the markets react to all this?”
With enthusiasm — and strong optimism!

In Asia, Japan’s Nikkei surpassed 50,000 points for the first time, closing up +2.46%. South Korea’s KOSPI rose +2.57%. In Europe, Spain hit a 52-week high, and the Stoxx 600 ended +0.2%. Overall, the mood was positive — but the big party happened in the U.S. The Dow Jones rose +0.71%, the S&P 500 nearly +1.3%, and the Nasdaq +1.86%. All three indexes closed at record highs.

Tech, industrial, and mining stocks led the rally. Coincidence? Not really. These are the sectors most sensitive to U.S.–China relations. When there’s stability and hope for cooperation, they see major gains — precisely because they depend on international supply chains, raw materials, and the flow of technology.

Several analysts said the recent developments increase the likelihood of a long-term truce. Meanwhile, Christian Mueller-Glissmann of Goldman Sachs noted that market liquidity is creating a favorable environment for risk-taking — but he also warned that geopolitical tensions have not disappeared.

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INVESTMENT OUTLOOK

The big question remains: “Will they actually reach a deal?” And if they do — for how long will this peace last?

The truth is… it doesn’t really matter that much.

Yes, we want stability in international relations. Yes, if tariffs are reduced and export controls are lifted, markets will keep rising. Yes, global trade and business activity will benefit. And of course, investors will too. It’s a positive development.

BUT!

What if everything collapses tomorrow?
What if Trump re-imposes tariffs?
What if China bans exports of key metals?
What if tensions flare up over Taiwan or a new confrontation breaks out?

Do we just wait for the news to decide our investments?
Of course not.

That’s where our strategy comes in.