During President Donald Trump’s historic trip to Beijing, discussions with Chinese officials prompted shifts in stocks, bonds, and oil markets. However, the anticipated “deliverables,” or substantial trade deals, seemed to be lacking.
Analysts from ING noted that markets were not buoyed by the outcome of the talks. Earlier, expectations rose when Nvidia CEO Jensen Huang joined the delegation, hinting at a possible easing of export controls on technology. Yet, those hopes quickly faded. U.S. Trade Representative Jamieson Greer confirmed that chip export controls were not on the agenda during the meeting with President Xi Jinping.
Interestingly, tariffs—another key point in the U.S.-China relationship—were also not discussed. Some Trump administration officials suggested the idea of forming a “board of trade” with China, yet little clarity followed.
As uncertainties linger about a temporary truce set to expire in November, Chinese officials have hinted at possible agricultural purchases worth billions. However, no firm announcements had materialized by the time Trump left Beijing.
In a separate matter, Trump did not solicit Xi’s help to reopen the crucial Strait of Hormuz. He explained that asking for favors can create complications, stating, “We don’t need favors.” Since the war with Iran began, vessel traffic through the strait has nearly halted, impacting more than 20% of the world’s energy supply daily. This closure has driven U.S. oil prices up by over 80% this year.
Economic repercussions are evident, as inflation rises. The Consumer Price Index reached 3.8%, the highest in three years, prompting investors to grow wary about potential Federal Reserve interest rate hikes.
On another note, Trump hinted at a possible deal for China to purchase Boeing aircraft. However, it was still uncertain whether an official agreement was reached. Given Boeing’s backlog of orders, any timeline for delivery might stretch from five to ten years.
Meanwhile, global markets reacted negatively. In Europe, major indexes fell sharply, with Germany’s index dropping by 2%. The bond market also faced a selloff; yields rose significantly amid political uncertainties in the U.K. and fears of potential economic shifts in response to rising oil prices.
According to a recent Bank of America survey, investors are increasingly anxious about inflation risks in the U.S. and beyond. The challenges posed by rising energy prices, worsened by geopolitical tensions, continue to grip economies worldwide.
