There was justifiable skepticism heading into the G20 summit when it came to China-U.S. relations. The Trump administration has been a trade hawk, especially when it comes to its largest economic rival. However, over the weekend U.S. President Trump and Chinese President Xi Jinping agreed to put a pause on the trade war that has driven anxiety in global markets over the past two years.
Trump was characteristically enthused about the agreement, calling it "an incredible deal". Xi was also optimistic in speaking to media in China. On the other hand, both sides have been quick to draw lines over trade in the aftermath. There are still hardline differences between both sides, and in truth this agreement seems to be little more than a temporary ceasefire to alleviate domestic political pressure.
Do not tell that to the markets.
Caterpillar (NYSE:CAT) stock was up 2.92% in early afternoon trading on December 3. The construction giant is reliant on Chinese investment for its long-term growth, especially as it looks to capitalize from China’s massive infrastructure plans in the next decade. Shares of Caterpillar have plunged 13.9% in 2018.
Boeing (NYSE:BA) stock was up 3.47% in early afternoon trading.
Boeing stock has been struck with volatility as US tariffs threaten its China-based growth. Recently Boeing delivered its 2000th plan to China.
The Chinese aviation industry is experiencing massive growth and has doubled its fleet size over the past five years. A deterioration in the U.S.-China trade relationship threatens Boeing’s access to the industry, and could open up opportunities for competition like the European multinational Airbus.
