Stock Markets Surge On Hopes of U.S.-China Trade Agreement

U.S. stock markets rose on hopes of a trade deal between the U.S. and China after President Donald Trump said that negotiations between the world's two largest economies were going "really well."

Top U.S. trade officials met with Chinese Vice Premier Liu He for seven hours on Thursday, Reuters reported, and Trump said that he planned to meet with He on Friday.

"We just completed a negotiation with China, we're doing very well, we're having another one tomorrow. I'm meeting with the vice premier over at the White House, and I think it's going really well," Trump said on Thursday. "We're going to see them tomorrow, right here, and it's going very, very well."

Bloomberg reported that the U.S. is considering a limited agreement that would involve a previously-agreed currency pact. A partial agreement, while not solving the scope of disputes between the two countries or addressing the thorny disagreements surrounding intellectual property, could help build confidence towards a larger deal. Bloomberg reported that an agreement could mean a delay for the tariff increase slated for October 15.

The Dow Jones climbed 350 points or 1.3 percent on Friday morning following the news, while the S&P 500 rose 1.3 percent and the Nasdaq rose 1.4 percent. Gold prices dropped and Treasury yields climbed, indicating investor confidence and hopes that progress would be made toward solving the long-running conflict that has infused uncertainty into the global economy, shaken U.S. consumer confidence and sapped global growth estimates.

The positive outlook was a notable shift from the start of the trade talks. Tensions between the U.S. and China escalated ahead of the discussions, with the U.S. adding 28 entities to a blacklist. Comments expressing support for protests in Hong Kong from the general manager for the NBA's Houston Rockets had also prompted an angry response from Chinese state-run news outlets, though The New York Times reported on Thursday that the government was seeking to quell public unrest.

U.S. tariffs on $250 billion of Chinese imports are set to rise from 25 percent to 30 percent on October 15. In August, Trump delayed threatened tariffs against China, though he said he was doing so to limit the impact on Americans' holiday shopping, not as a good-will gesture to China. Even before the developments on Thursday, some analysts had been expecting that the October 15 tariff increases would be pushed back.

Goldman Sachs said in an analyst note on Thursday morning that the bank expected the White House to slightly delay the implementation of additional tariffs, saying the impeachment "inquiry in the House may lead the White House to avoid further escalation of the trade war." The note also said that the 2020 election could influence Trump's thinking; the president has regularly touted his ability to improve the economy, but a range of recent data have hinted at slowing growth, with many economists concerned about the impact of the trade war with China.