The Chinese reaction to the next round of US tariffs indicates the desire to de-escalate tension. Asymmetrical response and sending delegations to talk to the US is a sign that Beijing will make concessions and warm up mutual relations. This is a positive signal for financial markets and risk attitude.
There are signs of willingness to make concessions on the part of China in the customs war with the USA. On US $ 200 billion US tariffs, yesterday, Beijing replied with tariffs that will cover USD 60 billion of US imports. They will reach 10 percent, not as planned 20 percent when preparing for this move. For the first time, therefore, there is no symmetry in retaliatory measures (the result of a huge disparity in mutual trade between the two countries). At the same time, this is a clear signal that China will most likely try to engage in constructive negotiations and reach a settlement. Lowering the rank of the envoy to US talks (later this month) from Deputy Prime Minister Liu He to Deputy Minister of Trade Wang Shouwen is a step that we take only as a desire to "preserve the face" in the broader context of seeking opportunities to talk and warm the relationship. This would be a step towards the implementation of a vision that we have been promoting for a long time, to ease tensions on the Washington-Beijing route before the US Congress elections in the middle of the presidency (November 4). Yesterday's events are an important impulse to increase the risk appetite in financial markets. Stock markets in Asia are up, the zloty is gaining, as is most of EM currencies. This trend will continue in the following days.
Let's now take a look at the SP500 technical picture at the H4 time frame. The market has spiked up towards the new all-time highs and so far made a local high at the level of 293.70. The nearest technical support is seen at the level of 292.55 and 291.72. No divergence is seen yet, so more higher prices might come. Sky is the limit for bulls!
