Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The new week begins with fresh optimism that Washington and Beijing are moving closer to a deal that could end their trade dispute…..but nothing’s official yet.
The Wall Street Journal reported overnight that China is offering to lower tariffs on U.S. farm, chemical, auto and other products as part of a trade deal that is nearing completion.
Significantly, officials have also indicated they could provide better protection for intellectual property – a key US demand.
As part of a deal, China is pledging to speed up the timetable for removing foreign-ownership limitations on auto ventures, and to reduce tariffs on imported vehicles to below the current rate of 15%, the WSJ reported.
A senior administration official cautioned on Sunday that a decision had not yet been made over lifting the U.S tariffs. The official also said a debate was continuing inside the administration with Trump unlikely to make a decision before a deal was closer to being done, likening to situation to the debate over what to do with U.S. sanctions in the lead-up to last week’s summit with North Korea’s Kim Jong Un.
One potential hurdle, though is that China is demanding that America lift its current tariffs on $200bn of imports — which Donald Trump imposed last year, trigging tit-for-tat tariffs.
Obviously, Beijing wants them removed ASAP, as they are hurting Chinese companies. Washington, though, wants to keep them in place until any agreement has been implemented.
More hawkish US officials will also be worried that Trump – who needs a foreign policy win – might settle too easily, so he can get a signing ceremony with president Xi.
Late last week, the US president hinted on Twitter that there was progress…
The WSJ predicts that both sides may face resistance at home, from critics who baulk at the terms of the deal.
So, the situation remains somewhat unclear. But investors are clinging to hopes of a trade war ceasefire, sending shares higher in Asia and Europe.
Also coming up today
The latest healthcheck on UK construction will probably to show that Brexit uncertainty is hurting builders. Markit’s construction PMI is expected to dip to 50.5, from 50.6, closer to stagnation.
We also get new eurozone investor confidence and US construction spending figures.
- 9:30am GMT: Sentix’s eurozone investor confidence survey for March
- 9.30am GMT: Markits’s UK construction PMI for February
- 3pm GMT: US construction spending for December