Positive developments in the U.S.-China trade war are adding to bullishness in certain areas of investment. President Trump signaled at the end of the week that an interim trade deal with China may be under consideration.
While the details of a limited deal have not yet been disclosed, even this scant news was enough to relieve a little of the pressure on the markets.
Asian markets rallied this week
Over in Asia, for example, stocks were up, as two welcome developments cheered investors there. The news that the European Central Bank (ECB) had slashed its deposit rate by 10 points and kick-started a rejuvenated bond-buying program added to slight improvements in the Sino-American trade situation and saw both the Nikkei and the Hang Seng index rising among others.
Over on this side of the world, greed has likewise been in the air, as several key indicators suggest a continuation of the bull run on stocks. From positive momentum in the S&P 500 to strong stock performance relative to bonds, there’s every reason to snap up shares in your favourite companies at the moment.
While it’s a possibility that the so-called trade war between Canada’s two largest trading partners could last for at least as long as the Trump administration does, seeing delayed tariff implementation on the part of the U.S. coinciding with China’s largest American soybean purchase since June is something of a relief.
There could be a long way to go yet, however, so be sure that stocks you add to a portfolio today are weatherproof.
Bullish investors should consider these commodities
Two commodities that are a good play for international bullishness come to mind: uranium and potash. Investors may wish to consider an investment in either space regardless of how the trade war shakes out, though both have the potential to break out should a positive breakthrough materialize.
Nutrien (TSX: NTR)(NYSE: NTR) is a strong play for long-term durability and is likely to do well should global markets improve. A major producer of potash, Nutrien is the stock to buy for exposure to agricultural sector and is one of the ultimate consumer staples stocks on the TSX, bar none. The company pays a tasty dividend, currently yielding 3.63%.
While Nutrien could be better value, its combination of moderately rich passive income with a healthy balance sheet merge nicely with a wide economic moat in a highly defensive sector. Strong results during the summer coincided with a dividend hike, which serves as a taste of things to come.
With a growing reputation of generously rewarding shareholders, the potash miner and agri supplies giant is the textbook definition of investment-grade.
The bottom line
Stocks that expose investors to international markets are likely to improve, as positive movements in the trade war between the U.S. and China buoy major industries. However, key consumer staples stocks are likely to do well whatever the outcome may be, with agri supplies being a frontline area of investment when it comes to the intersection of defensiveness and reliable dividends.
