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Trump and Xi Agree to Trade Truce: Everything You Need to Know

Credit: The Street
Published on July 1, 2019 - Duration: 02:08s

Trump and Xi Agree to Trade Truce: Everything You Need to Know

Here's your brief on G-20, and its market implications: President Trump and Xi Jinping agreed to an indefinite trade truce.

The U.S. has agreed to refrain from enacting any additional tariffs to the ones currently in place.

In exchange, China has agreed to resume buying large amounts of agriculture products, such as soybeans, from the U.S. One of the biggest reasons for exhale on the U.S. side is Trump's partial lift of the Huawei ban, in which U.S. semiconductor manufacturers were not allowed to sell chips to Huawei for its devices.

Now they can, Trump said, and this should be a boon to chip companies including Real Money Stock of the Day Nvidia .

Broader Market Takeaways: All three major U.S. indices were up to start 2019's second half.

Now, domestic demand won't be as dented as some were bracing for, which may mean the Federal Reserve may be slightly less compelled to soon reduce interest rates.

The market may not sort out the net affect on equities immediately.

U.S. stocks are up considerably in 2019, and huge upside from here isn't a shoo-in.

The trade deal is a positive for earnings, especially for industrials, semiconductors, and agriculture stocks.

With materials, it gets murky, but since et's remember stocks are up a lot.

Chip stocks: Qualcomm , Qorvo , Broadcom , and Micron all provide a lot of chips for Huawei.

Just know those stocks are up a lot this year, although Goldman Sachs had said a Huawei resolution would provide huge upside for Qualcomm.

Apple: Analysts were estimating additional tariffs would bring expected earnings down by about 25%.

That won't happen now.

While the stock is up 14% in the past month to $197 a share, many analysts say there's way more upside than that, as the market hasn't fully appreciated the optimistic view on services Treasuries: The 10 year yield can tell a lot about economic expectations, and therefore stocks.

The ten year yield rose to 2.02% after G20.

It had fallen to below 2% from a 2019 high of 2.75%.

When the yield rises, that means investors are expecting better economic growth and higher inflation.

It often also means money is moving into stocks.

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