US-China trade deal ‘to do little for world economy’

The two main US stock indices — the S&P 500 and the Dow Jones — traded at new record highs as President Donald Trump hailed completing ‘phase 1’ of a trade deal between the US and China as “a momentous step”.

US-China trade deal ‘to do little for world economy’

The two main US stock indices — the S&P 500 and the Dow Jones — traded at new record highs as President Donald Trump hailed completing ‘phase 1’ of a trade deal between the US and China as “a momentous step”.

But European stock markets were more subdued amid investor scepticism the deal will do much to boost the world economy and support exports from countries including Germany and Ireland.

China has agreed to buy $200bn (€179bn) of US goods, including agricultural, manufacturing, and energy goods over the next two years, President Trump said at a White House presentation with leading Chinese government ministers.

But the trade dispute effectively drags on with billions worth of imports from China still subject to stinging tariffs until the second phase of any peace accord is agreed, experts say. Joshua Mahony, senior market analyst at online broker IG, said the deal will likely do little to boost the world economy and full “removal of the Chinese tariffs feels further away than ever”.

“While the deal will almost certainly help the US economy through increased Chinese demand, the decision to retain tariffs on Chinese imports does highlight a continued America first deal which seeks to benefit US growth at the expense of global prosperity,” Mr Mahony said.

The Dax in Frankfurt and the Cac-40 indices in Paris closed lower, while London’s Ftse-100 gained as sterling fell. Investors saw a fall in UK inflation as boosting the chances the Bank of England will cut interest rates.

Expectations for a UK rate cut have risen in the past week following comments by a number of Bank of England policymakers.

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