Deal on US-China trade spat expected by year-end
There is a 70 to 80 per cent chance that the United States and China will reach an agreement to end the long-standing trade disputes, Stephane Moier, chief investment office at private bank Lombard Odier, said on Wednesday.
US president Donald Trump and Chinese president Xi Jinping agreed to resume trade negotiations after talks at the G20 meeting in Osaka last week. Markets have been reacting positively to the truce with stocks rising globally.
Should an economic slowdown occur in the US, it will not benefit Trump who is seeking a second-term in office. Neither will it benefit China, as it needs more time before the country can totally depend on its domestic economy. Monier said she expects the two sides to reach a trade deal by the end of this year or early 2020.
However, if the two sides fail to reach a deal, the global economy and asset classes will be hit hard.
If the trade war further escalates and central banks around the world fail to act in time, it can lead to a global economic recession, he warned.
