U.S. Stock Market Has Strong 1st Day Of Trading In 2020

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U.S. stocks were up during the first day of trading in 2020 as anxieties of the U.S.-China trade war lessen.

China’s central bank recently pursued easing in their monetary policy. More specifically, they lowered the threshold amount of cash reserves that banks need to hold. This means that there is more cash that can be lent in China’s economy, resulting in increased liquidity.

“Even if there is bad news you see that central banks have put quite a solid foundation under the market,” said Bas van Geffen, a quantitative analyst at Rabobank.

This pivot in monetary policy has signaled to investors that China plans on continuing efforts to fuel economic growth into the coming year. Additionally, this increased liquidity is meant to address figures that show a slowdown in China’s manufacturing growth.

U.S. stocks increased in value after President Donald Trump announced that on January 15th, the first phase of a trade deal with China would be signed. Bond yields in Europe are also on the rise which has proved to be a benefit for European banks. The yield curve is expected to continue steepening.

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