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U.S., International Equities on Watch After Gloomy Outlook for Trade Deal

This article was originally published on ETFTrends.com.

The markets cheered a rate cut to end Wednesday’s session, but were greeted to red indexes on Thursday as the outlook for a long-term U.S.-China trade deal turned gloomy on Halloween. Despite better-than-expected earnings from the likes of Facebook and Apple, the Dow Jones Industrial Average fell as much as 250 points.

A CNBC report cited Bloomberg News who “reported Thursday, citing unnamed sources, that Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report added Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal.”

“Whenever you see a lowering of trade-deal expectations, it’s going to upset markets,” said Jeff Kilburg, CEO of KKM Financial. “Here we are at new all-time highs, so the sensitivity to any type of headwind in the U.S.-China trade tariff negotiations is going to be an overreaction.”

Optimism was riding high in the month of October after a “Phase 1” trade deal was announced by U.S. President Donald Trump. President Trump tamped down any panic in the markets with a tweet that the majority of the trade deal would be complete with the first phase.

China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances. The new location will be announced soon. President Xi and President Trump will do signing!

— Donald J. Trump (@realDonaldTrump) October 31, 2019

Investors banking on strength once a trade deal is complete can look to the Direxion FTSE Russell US Over International ETF (RWUI) . RWUI offers investors the ability to benefit not only from domestic U.S. markets potentially performing well but from their outperformance compared to international markets.

RWUI features:

  • Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
  • The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
  • The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).

Investors looking to play the other side can use the Direxion FTSE International Over US ETF (RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex US Index and 50 percent short exposure to the Russell 1000® Index.

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