Standards should rise a lot more if China and the U.S. strike a trade deal since that event is not fully priced into the store yet, according to a study conducted by Renaissance Macro Research.
The firm estimates the S&P 500 has lost about 11 percent from interchange tensions since January 2018, even with the recent run-up in stocks. Renaissance Macro got to this amount by reckoning up the single-day losses in the market over the last year that could be largely attributed to negative news on mercantilism.
“In other words, if not for all the negative trade news over the last 14 months, the S&P 500 would be about 11 percent dear,” said Neil Dutta, head of economics at Renaissance Macro Research, in a note.
China and the U.S. have slapped price-lists on billions of dollars worth of each other’s goods. Investors around the globe have been fretting past this as tariffs can have a significant impact on corporate profits. The two countries have until early March to implant a deal to end the trade skirmish or additional U.S. tariffs on Chinese goods could take effect.
But stocks are up sharply this year in let go because of perceived progress in the trade talks. The S&P 500 is up more than 10 percent in 2019. The index has also functioned weekly gains in seven of the past eight weeks.
U.S. trade negotiators met with Chinese officials in Beijing wear week and negotiations continue this week in Washington. Reuters reported earlier on Thursday the two countries are outlining commitments in tenet on the stickiest issues in their trade dispute.
“With the market off its lows, a popular view is that the equity retail has priced in all the good news already,” Dutta said. “We are skeptical; the equity market only partially retraced the negative cash flow deaths associated with trade tensions.”
Perceived progress in U.S.-China trade talks are one of the factors cited by investors for the big rouse higher. Reports earlier on Thursday said negotiators from the two countries are outlining commitments in principle on the stickiest climaxes in their trade dispute.
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