Bessent has shared that the United States and China have reached a framework agreement regarding TikTok. Further discussions are expected in the next few weeks, with a meeting between Trump and Xi planned for Friday.

Framework Agreement With China

Greer from the USTR said that talks on broader issues like tariffs will be postponed until Friday’s meeting. Since TikTok is not publicly traded, any market effects will likely come from a potential sale involving a major US tech company. Greer also suggested that the US might consider holding off on tariffs, depending on the outcome of upcoming talks. This news indicates a decrease in US-China tensions, which could reduce market volatility. The VIX, which has been around 18, has dipped below its 50-day average in futures trading following this announcement. Selling VIX calls or buying puts on volatility ETFs for the upcoming weeks seems like a smart strategy.

Potential Market Impact

We should look at this in the context of the trade wars of the late 2010s when any sign of tariff cuts sent markets up significantly. With the Trump-Xi call coming up this Friday, preparing for a potential increase in equity indices makes sense. Buying near-term call options on the S&P 500 or Nasdaq 100 is a good way to take advantage of this possible positive sentiment. The real impact will be on US tech companies with significant exposure to China, especially in the semiconductor sector. The SOX index, which has dropped 4% over the past quarter due to these tensions, is a crucial area to monitor. We suggest looking at call options on major semiconductor ETFs or individual companies that earn over 25% of their revenue from China. While the TikTok agreement itself won’t have a major direct market effect, the news about a possible pause in tariffs is the more significant story. The offshore yuan (CNH) has already strengthened past 7.15 against the dollar, reaching a one-month high and reflecting this optimism. This could support emerging markets and slightly weaken the dollar, which you can trade using currency futures or options. Create your live VT Markets account and start trading now.

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