Equity markets rallied on the back of Trump's decision to renew trade talks with China "in the coming weeks," with the S&P rising by more than 1%.
The Dow Jones Industrial Average was up 1.41%, while the Nasdaq Composite climbed 1.75%.
Bond and currency markets were also positively impacted, with the yield on the 10-year US Treasury bond rising from 1.456% to 1.569% on Wednesday. This spurred gains in the financial sector in particular, with Citi
That said, even though news like this sends markets skyrocketing in the short-term, investors are slightly more weary about future trade relations given Trump's tendency to be erratic in this domain in the past. China is a major issue of contention moving into an election year, and therefore serves as both a point of leverage and potential weakness depending on what rhetoric is employed.
"Hopes of a trade resolution...shine brightly. That being said, I think you have to be a little bit careful. We've been down this path a few times before," said JJ Kinahan, chief market strategist at TD Ameritrade.
Tariffs of around $350 B have been imposed so far and one small step towards a trade deal will not do complications that have been accumulating for the past year.
It was tech stocks that stood atop the leaderboard on Wednesday, with the VanEck Vectors Semiconductor ETF rising 3%, Advanced Micro Devices rising 1.8% and On Semiconductor up by 2.6%. This is because the tech industry is significantly impacted by the tariffs, as many of the semiconductor's constituent parts are manufactured abroad.
"China and the US announced new round of trade talks and will work to make substantial progress," Hu Xijin wrote on Twitter. "Personally I think the US, worn out by the trade war, may no longer hope for crushing China's will. There's more possibility of a breakthrough between the two sides."
There also exists the issue of appeasing the American public, with both Democrats and Republicans wary of the fact that ZTE, a Chinese telecom company, escaped scrutiny courtesy of Trump.
In order to gauge if trade tensions will subside, the Chinese economy will also have to closely be monitored. It is currently growing at its slowest pace in two decades, but given that the country is celebrating its founder's day on October 1, it is unlikely that China will back down or make any trade concessions around that time.
