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US and China sign deal to ease trade war, will ASX shares rise?

Tristan Harrison
China and US flags

The ASX 200 (ASX: XJO) is expected to rise today after a deal was signed between the US and China to ease the trade war. 

A key part of the deal is that China has promised to increase US imports by at least $200 billion above 2017 levels. Agriculture purchases will be boosted by $32 billion, manufacturing will be boosted by $78 billion, energy will be boosted by $52 billion and services will be boosted by $38 billion. 

China also said it would improve its intellectual property rules. The Asian powerhouse will take more action on counterfeiting and it will be easier for businesses to take legal action over trade secret theft. 

In return, the United States has agreed to halve some of the tariffs put on Chinese products. 

But, this hasn’t solved the whole issue. A lot of the tariffs will remain in place until the next phase of the talks are successful. Reportedly, tariffs will remain on $360 billion worth of Chinese goods and a majority of tariffs will remain on $100 billion worth of US products.

US President Donald Trump said: “Together we are righting the wrongs of the past and delivering a future of economic justice and security. Far beyond even this deal, it’s going to lead to an even stronger world peace.”

There are lots of global trade focused shares on the ASX that are likely to rise in response to better international trade conditions such as BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), Brambles Limited (ASX: BXB), WiseTech Global Ltd (ASX: WTC) and Altium Limited (ASX: ALU). 

The trade war has been the main thing keeping the global share market down over the past couple of years, apart from the occasional geopolitical event. 

Foolish takeaway

This could be the start of another bull run for the share market if this deal (and future de-escalations) leads to economic growth. However, share markets are certainly trading at high levels with low interest rates, so I think we need to be picky about which shares we buy.

The post US and China sign deal to ease trade war, will ASX shares rise? appeared first on Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020