US Market ends higher on U.S.-China trade pact

The US stock market finished session higher on Friday, 13 December 2019, as appetite for riskier assets underpinned on cooling trade tensions after U.S. and Chinese officials announced that the countries had reached a phase one agreement after a contentious 18-month trade war. China agreed to billions of dollars in agricultural purchases from the U.S., while U.S. President Donald Trump vowed to not pursue a new round of tariffs that had been scheduled for Sunday. At closing bell, the Dow Jones Industrial Average rose 3.28 points, or 0.01%, to 28,138.38, the S&P 500 gained 0.23 point, or 0.01%, to 3,168.80 and the Nasdaq Composite added 17.56 points, or 0.2%, to 8,734.88.

The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The "Phase 1" agreement means that the U.S. won't impose new tariffs on Chinese goods that had been scheduled for Sunday. In addition to canceling the new tariffs, the U.S. also agreed to reduce certain existing import taxes on about $112 billion in Chinese goods from 15% to 7.5%. In return, Trump said that the Chinese have agreed to "massive" purchases of American farm and manufactured products as part of the initial deal. The president said a so-called phase-two deal will be discussed immediately rather than after the 2020 presidential election. The two major economies plan to sign the partial accord in the first week of January.

 

Meanwhile, investors were also digesting U.K. Prime Minister Johnson's Conservative Party swept to a landslide victory in elections on Thursday, securing a strong majority in Parliament. The convincing win gives him support to secure a Brexit deal and negotiate a new relationship with the European Union next year. Brexit concerns have been cited as one lingering headwind for global investors.

Technology companies, which rely heavily on China for sales as well as parts, led the gainers, outweighing losses in banks, energy stocks and elsewhere.

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