Ian Mount
2 min read
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The framework of a trade truce announced by the U.S. and China after two days of negotiations in London did little to excite investors, as it appeared more like a return to the previous agreement than a breakthrough. Elon Musk’s “regret” about his posts regarding Trump was a different story. Stocks in Asia rose, hovered in Europe, and slipped in the U.S.
Elon Musk’s mea culpa early Wednesday gave markets something to cheer about. His simple 15-word apology, in which he admitted that some of his posts last week about U.S. President Donald Trump “went too far,” gave Tesla investors hope that a salvaged relationship between the world’s richest man and arguably the world’s most powerful one would save the EV company from bitter state-led retaliation.
In trading before U.S. markets opened Tesla shares rose as much as 2.9%, after jumping 5.7% on Tuesday.
Investors—at least those in U.S. equities—were decidedly less excited about the vague “framework” for a trade truce announced after two days of marathon negotiations between the U.S. and China in London.
Details about the framework were scarce—“I feel really good about where we got to,” Secretary Howard Lutnick told the Wall Street Journal—with the U.S. pushing for the resumption of exports of China’s rare-earth minerals and magnets, and China demanding the U.S. significantly ease restrictions on the sale of semiconductors and the technology used to make them. If both sides acceded to those demands, as it appears they plan to, it would arguably mark a win for China.
“What’s become clear in the last few weeks is that this rare-earths issue has got real leverage for Beijing,” Christopher Wood, global head of equity strategy research at Jefferies in Hong Kong, told the WSJ.
In pre-market trading, the three major U.S. markets were off about 0.15%.
In the longer term, Wall Street was not totally convinced by the deal.
“While the mood music has stayed positive, investors may be wary of the pattern that emerged during the previous U.S.-China trade talks in 2018–19, when apparently constructive in-person meetings seemed to take a step back as the negotiating teams returned to their capitals,” Deutsche Bank global head of macro research, Jim Reid, wrote in a note seen by Fortune.
