The trade war between the United States and China has probably been the single most disruptive economic and trading event over the past half a decade or so. When the two biggest economies in the world are involved in a bruising trade war, then the ripples of such a prolonged confrontation are surely going to be felt in the global markets. The markets in the United States, Europe, China, and the Asia Pacific region went through immense turmoil throughout the past few months. Just when it seemed that there was no end in sign to this confrontation between these superpowers, reports have emerged that the situation could yet improve.
As a matter of fact, the reports also stated that a trade envoy from the United States could be in China shortly, in order to thrash out the details of a fresh trade deal. Due to the possibility of a thawing of tensions, the stocks in the Asia Pacific Region have also started rising. The stocks opened higher on Wednesday in the APAC, and the majority of the indices tracking the stocks in the region have been in the green. The Bloomberg news that stated that officials from the United States are going to have a meeting with their counterparts in China has buoyed markets everywhere. After the news broke yesterday, the indices on Wall Street hit record highs as optimism grew among investors that the trade war might be coming to an end after months of sparring between the two nations.
That being said, it is also important to note that the possibility of rate cuts by the European Central Bank this week and the United States Federal Reserve towards the end of the month, is also a major trigger. The muted global growth has forced many banks to consider the possibility of rate cuts in order to stimulate their economies, and that is what investors are expecting this week. Many reports have stated that the ECB is looking to cut rates by 10 basis points, while the Fed might cut rates by 25 basis points.