Universal markets are enjoying some gains this week on hopes that Beijing and Washington will reach a interchange agreement, but strategists at J.P. Morgan Asset Management are skeptical on whether anything significant will be resolved.
Chinese and the U.S. officials concluded another in the neighbourhood of trade talks Wednesday, which were extended into a third day — suggesting there has been some compromise. The Chinese Outlandish Ministry said that details of the talks will be released “soon.”
“I think (the deal) would have to be exceptionally far-reaching for the markets to breath an enormous sigh of relief,” Karen Ward, chief market strategist at J.P. Morgan Asset Command, told CNBC Wednesday.
“I don’t think, unfortunately, that (the trade war) is something that will disappear from our field of vision for the full year,” she added.
President Donald Trump campaigned in 2016 on cracking down on what he called Chinese barter abuses, and both countries have been at odds for about a year. The U.S. has put tariffs on $250 billion in Chinese goods — and has terrorized more, while Beijing has responded with tariffs on $110 billion in U.S. goods.
Ward added that the arrangement “would have to be extraordinarily complete” and “it would also have to be clear that (Trump) is not diverting attention at best away from China but towards Europe and the autos” to calm down the financial markets.
Investors have irritated over the escalation in tensions between Beijing and Washington and their wider impact. According to data collected by J.P. Morgan Asset Directors, there has been a clear drop for U.S. and Chinese manufacturing figures, suggesting that both countries are feeling the so to speaks of the trade conflict.
“We would have to feel a strong conviction that (the America First policy) was just off the factious agenda and it is very hard to see that when there is still quite a lot of electoral support for this agenda,” Check also told CNBC.
Mike Bell, a global market strategist at J.P. Morgan Asset Management, said it was depart that U.S. growth will fade in 2019, while presenting the bank’s “Guide to Markets” at an event in London on Wednesday. The bank assumes that the positives from the fiscal stimulus messages of last year will subside, which, coupled with the deal war, will add pressure to the economy.
By year-end U.S. growth is set to be below 2 percent “but in the near term a recession still looks distasteful,” Ward said in the research.
Other strategists have said the U.S. economy could even enter a technical economic downturn if Trump does not fix the ongoing impasse on trade with China.
“If there is a recession and a crash, it is Trump’s decision, because he has survived a crucial mistake here of closing the government. At the same time he hasn’t resolved China,” Michael Harris, lurch of Cribstone Strategic Macro, told CNBC’s “Squawk Box Europe” on Monday.
“If (Trump) doesn’t resolve China, he is seek from for a recession, I think that’s a given because you can’t have two major uncertainties at the same time,” Harris added.