The Tell: Why investors shouldn’t get too elated about a U.S.-China trade deal

A trade deal between the U.S. and China won’t be the panacea that financial markets might be hoping, said Neil Shearing, group chief economist at Capital Economics.

With a substantial amount of trade optimism already priced into stocks, a dearth of details on any extant trade pact, and a global growth slowdown swirling, reasons to remain cautious abound, the economist said.

On Monday, China’s Shanghai Composite Index SHCOMP, +1.12% closed at its best level since June thanks to investor excitement over trade, while the major U.S. indexes, the Dow Jones Industrial DJIA, -0.79% and S&P 500 index SPX, -0.39% are looking at year-to-date gains of at least 10%, despite Monday’s wobbles, according to FactSet data.

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