Chinese stocks slipped overnight as the two-month extension of the US-China trade truce fell short of some Wall Street expectations (some desks were hoping for +6 months), offering limited reassurance that today's talks would deliver a long-lasting trade deal, stabilize bilateral ties, and ease uncertainty over global trade.
The mainland CSI 300 Index dropped 1.7%, while the Hang Seng China Enterprises Index pared losses and closed flat. Broader Asian equities also came under pressure after a global bond selloff gathered pace as investors responded to stronger-than-expected US economic data on Wednesday and weak Treasury auction demand amid increasing fears of further Federal Reserve tightening
The two-month truce extension through Jan. 10 removes an immediate source of uncertainty but falls short of the three-to-six-month extension some Wall Street desks were hoping for.
As we detailed in an overnight note titled "Mr. Xi Comes To Washington: What Wall Street Banks Are Expecting," President Trump rolled out the red carpet for President Xi Jinping at Joint Base Andrews on Wednesday.
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