December 12, 2018

Dow rises 300 points on new US-China trade hopes

Stocks jumped Wednesday following the latest twist in the US-China trade saga.

President Trump suggested that he could use the arrest of Meng Wanzhou, the chief financial officer of Chinese tech giant Huawei, as a bargaining chip in trade talks. Trump told Reuters in an interview Tuesday that he'd consider getting involved in Meng's case if it could help move trade talks along.

"If I think it's good for the country, if I think it's good for what will be certainly the largest trade deal ever made -- which is a very important thing -- what's good for national security -- I would certainly intervene if I thought it was necessary," Trump said.

The Dow surged 315 points in early trading on the news, led by big surges in US companies with significant exposure to China, such as Apple (AAPL), Boeing (BA), Caterpillar (CAT) and McDonald's (MCD). The S&P 500 and Nasdaq rose more than 1% as welll.

China's Shanghai Composite and Hong Kong's Hang Seng also rallied Wednesday. And shares of leading Chinese companies that trade in the United States -- including Alibaba (BABA), Baidu (BIDU) and JD (JD) -- were all higher.

Stocks also got a lift from a Wall Street Journal report that suggested China is looking to soften some of its protectionist stances and allows more access to the Chinese market for US and other foreign companies.

The market has been extremely volatile for the past few weeks, rising and falling with the latest headlines about what's next for US-China trade relations.

The newfound optimism about China trade talks could give a much needed boost to the initial public offering of Tencent Music as well. Tencent Music, which is owned by Chinese tech giant Tencent, is going public on the New York Stock Exchange Wednesday.

But the company is raising less money from the IPO than planned. The Tencent Music (TME) IPO also comes at a time when tech stocks in general, and top streaming music rival Spotfiy, are struggling.

Spotify (SPOT) went public earlier this year and its stock is trading below its offering price.

Trade talks with China and Chinese stocks won't be the only thing investors will be watching Wednesday though. Wall Street will also be keeping a close eye on the latest developments with the UK and Brexit.

British Prime Minister Theresa May faces a no-confidence vote in Parliament later Wednesday, with her political fate hanging in the balance. Despite the uncertainty, the UK's FTSE 100 index as well as markets throughout Europe were trading higher.

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