What a US-China trade deal will bring to the markets

In our view, a US-China trade deal is likely in H2 - and we expect it to be extensive.
We look for a deal, among other things, to roll back tariffs to a large degree. Meanwhile, we see a 15% risk Donald Trump will attack the car industry in a next step.
A trade deal would support a recovery in China and emerging markets and stabilise eurozone growth at a time when past monetary easing also starts to support.
In equities, a trade deal is largely priced in, leaving risks largely balanced if not slightly on the downside, given the negative 'reality gap' at present.
In FX markets, we expect a trade deal to support commodity currencies versus notably JPY; EUR/USD support in 3-6M but muted to negative initial reaction.

Danske Research Team Danske Bank A/S

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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