Market analysts are closely watching the ongoing dialogue between U.S. Treasury Secretary Scott Bessent

Market analysts are closely watching the ongoing dialogue between U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and China's Vice Premier He Lifeng

U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer have made substantial progress during their discussions with China’s Vice Premier He Lifeng, aiming to ease tensions in the prolonged trade standoff, according to market analysts.

As both sides attempt to ease tensions in their prolonged trade standoff, market analysts are closely watching the ongoing dialogue between U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and China’s Vice Premier He Lifeng. On Sunday, Bessent and Greer noted the duo made substantial progress during the negotiations.

“The U.S. has reached a trade deal with China, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said Sunday, adding that the talks in Switzerland went better than expected, with agreements coming more quickly than anticipated.” A statement from the White House confirmed the completion of the trade deal between the U.S. and China. The talks, which also involved other senior officials from both sides, began on Saturday in Geneva, Switzerland.

According to sources familiar with the matter, further conversations are expected to continue on Sunday, signaling the first conclave of American and Chinese envoys.

Ahead of the negotiations, both nations imposed significant tariffs on mutual imports, setting the stage for this weekend’s dialogue.

Markets—including equities, cryptocurrencies, and gold—are in suspense as the U.S.-China negotiations in Geneva could significantly reshape the contours of global trade and finance. The S&P 500, along with other major indexes, has clawed back some ground since the tariff announcements but remains roughly 8% below its peak levels.

Market turbulence is still pronounced, with the Cboe Volatility Index (VIX) holding above its historical mean, signaling persistent unease. In recent days, even an offhand remark from the U.S. president or an unofficial leak from Beijing has been enough to jolt asset prices with considerable strength.

Moreover, any positive outcome from the Geneva discussions—be it a scaling back of tariffs, a framework for future dialogue, or merely a softening in tone—could ignite a swift rally across equities, digital assets, and could even spark a retreat in gold prices.

Some delegates from both China and the U.S. departed early, noted Wall Street Journal reporter Brian Schwartz, who is covering the story. However, Bessent and Greer will be staying for an extra hour, according to WSJ sources.

The trade negotiations between the U.S. and China have unfolded under a deliberate veil of secrecy, reflecting the high stakes and sensitivity of the discussions. The delegates have been avoiding press interactions, as even the slightest miscue or misinterpretation could destabilize the already volatile financial markets.

After good progress today in the U.S.-China trade talks in Switzerland, the talks will continue tomorrow. The talks have gone better than expected, with agreements being reached more quickly than anticipated. We will be able to provide more details on Monday, Beijing time.

— Donald J. Trump (@realDonaldTrump) May 5, 2024

The two economic superpowers have been locked in a trade war since former President Donald Trump imposed tariffs on Chinese goods in 2018. The tariffs have escalated, and the two sides have threatened each other with further trade sanctions.

The trade war has had a negative impact on the global economy. It has also led to a decline in investment and employment in both countries.

In recent months, both the U.S. and China have shown signs of being open to reaching a trade deal. The two sides have held several rounds of talks, and there has been progress on some issues. However, there are still major differences that need to be resolved.

Some of the key issues in the trade talks include the U.S. trade deficit with China, China’s intellectual property practices, and barriers to U.S. companies operating in China.

The trade talks are expected to continue in the coming weeks and months. It remains to be seen whether the two sides will be able to reach a comprehensive trade deal.