Key Takeaways
- U.S. and Chinese officials concluded a second day of talks in Madrid, with a framework agreement reached for TikTok to transition to U.S.-owned control, as confirmed by U.S. Treasury Secretary Bessent and USTR Greer.
- USTR Greer indicated openness to considering further action on a tariffs pause if ongoing talks are positive, while Treasury Secretary Bessent noted that tariffs on Chinese imports of Russian oil were mentioned but not the main focus.
- The Bank of England is expected to slow its Quantitative Tightening (QT) program, according to an Investec economist, while the U.S. Federal Reserve will observe its quiet period, with no official interviews during this time.
- Economic data showed a significant contraction in the US Empire Manufacturing Index for September, falling to -8.7 against an estimated 5.0, while Canada's Manufacturing Sales for July surpassed expectations, rising 2.5% month-over-month.
- Oracle (ORCL) shares extended gains, rising 1.3%, and S&P 500 (^GSPC) and Nasdaq 100 (^NDX) index futures climbed to session highs, signaling positive market sentiment.
U.S. and Chinese principals concluded their second day of discussions in Madrid, with key developments emerging on trade and the contentious issue of TikTok. U.S. Trade Representative (USTR) Greer and U.S. Treasury Secretary Bessent were present at the discussions.
US-China Talks Yield TikTok Framework, Tariff Discussions Continue
U.S. Treasury Secretary Bessent announced that a framework for a deal regarding TikTok has been reached, which USTR Greer further clarified involves a plan for TikTok to transition to U.S.-owned control. Greer highlighted the agreement on the "challenging and prickly issue of TikTok," acknowledging that "without Trump leadership we would not have been able to reach a deal." The Chinese delegation departed the Spanish Foreign Ministry following their meeting with Secretary Bessent.
On the trade front, USTR Greer expressed openness to considering further action on a tariffs pause if talks continue to be positive. Treasury Secretary Bessent confirmed that tariffs on Chinese imports of Russian oil were mentioned during the discussions but were not the central focus. Bessent also indicated that another round of talks is likely in the coming weeks.
Central Bank Outlook and Economic Indicators
In monetary policy news, an Investec economist suggested that the Bank of England is likely to slow down its Quantitative Tightening (QT) program. This comes as central banks globally navigate complex economic environments. Meanwhile, U.S. Treasury Secretary Bessent reminded the market that the Federal Reserve would not conduct Chair interviews during its quiet period, a standard practice ahead of policy meetings. The U.S. Senate is expected to confirm a Fed pick ahead of an upcoming meeting.
Economic data released today presented a mixed picture. The US Empire Manufacturing Index for September registered a significant contraction, coming in at -8.7, sharply below the previous month's 11.9 and estimates of 5.0. Conversely, Canada's Manufacturing Sales for July showed robust growth, rising 2.5% month-over-month, exceeding both the previous 0.3% and the estimated 1.8%. Wholesale sales excluding petroleum in Canada also increased by 1.2% in July.
Market and Political Landscape
Market sentiment saw a boost with Oracle (ORCL) shares extending their gain to a session high, up 1.3%. S&P 500 (^GSPC) and Nasdaq 100 (^NDX) index futures also extended their climb to session highs.
In U.S. political news, House Republicans are reportedly unhappy with GOP leaders putting another Continuing Resolution (CR) on the floor. GOP Representative Thomas Massie stated he would vote "No" on the incoming Republican CR unless it includes spending cuts, a stance that could challenge Speaker Johnson's ability to pass the resolution with a narrow majority.
Additionally, Iran’s nuclear chief called for support for its draft resolution at the International Atomic Energy Agency (IAEA) General Conference, aimed at protecting nuclear sites from attacks.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.