Mainland China equity market finished session lower for second straight session on Wednesday, 15 January 2020, as investors took profit on caution ahead of the signing of an initial US-China trade deal, with sentiment somewhat dented by comments from the US Treasury Secretary that tariffs would remain in place for now. At closing bell, the benchmark Shanghai Composite Index declined 0.54%, or 16.78 points, to 3,090.04. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.22%, or 3.91 points, to 1,814.21. The blue-chip CSI300 index was down 0.55%, or 23.16 points, to 4,166.73.
Phase one of the U. S.-China trade deal is set to be signed on Wednesday in Washington. As part of a U. S.-China trade deal, China will pledge to buy $200 billion of U. S. goods over a two-year period in four industries, according to several reports, in return the U.
S. will scrap a new round of tariffs and cut the tariffs on $120 billion worth of Chinese goods in half to 7.5 %, but a 25 % tariff on $250 billion worth of Chinese imports will remain in place. The two sides have an understanding that no sooner than 10 months after the signing of the agreement at the White House Wednesday, the U. S. will review progress and potentially trim tariffs now in place on $360 billion of imports from China.
However, reports released on Tuesday stated existing tariffs on Chinese imports would likely stay in place until after the U. S. elections in November and any reduction would depend on Chinese compliance with the terms of the accord. The U. S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer said there was no agreement in place with China on further tariff reductions, taking the shine out of market enthusiasm about the upcoming trade deal.
CURRENCY NEWS: The Chinese yuan was weaker than the previous late session close despite firmer midpoint fixing by the People's Bank of China. Prior to market opening, the People's Bank of China (PBOC) lifted its official midpoint CNY=PBOC for the fourth straight day to 6.8845 per dollar, 109 pips or 0.16% firmer than the previous fix of 6.8954 and the strongest since July 31, 2019. In the spot market, onshore yuan CNY=CFXS opened at 6.8910 per dollar and was changing hands at 6.8950 at midday, 105 pips weaker than the previous late session close.
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