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    Trump and Xi discuss TikTok agreement during trade talks, fostering optimism

    by VT Markets
    /
    Sep 19, 2025
    The recent phone call between Trump and Xi focused on the TikTok deal and is part of broader trade talks. We expect this conversation to yield positive remarks about trade, and it’s likely to influence the rising Chinese stock markets.

    Economic Implications of US-China Relations

    If U.S.-China relations improve, we could see less market volatility in the weeks ahead. This may make selling volatility an attractive strategy, such as shorting VIX futures or selling credit spreads on the SPX index. Currently, the VIX is around 17, and any positive statement could lower it to around 14, its lowest point this year. The booming Chinese stock market offers a significant opportunity if the trade news is favorable. The CSI 300 Index has already gained over 12% in the last quarter, driven by strong domestic policies. We should consider purchasing call options on ETFs focused on China, like FXI or KWEB, to benefit from the momentum that a positive trade headline could create. For U.S. investors, companies that rely heavily on revenue from China are worth watching. Remember how stocks like Apple, Boeing, and semiconductor companies surged during the trade disputes from 2018 to 2020 at any sign of progress. Buying short-dated calls on these stocks is a direct way to capitalize on good news from the talks.

    Currency and Market Impact

    In addition to stocks, we’re also keeping an eye on currency movements, especially the U.S. dollar compared to the Chinese yuan. An easing of trade tensions could boost the yuan, likely driving the USD/CNH exchange rate below 7.25, a level it has struggled to break. This outlook is supported by recent data showing that China’s manufacturing PMI exceeded expectations last month at 51.5. Create your live VT Markets account and start trading now.

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