Late last week we received news that the United States and China had struck a new 24-month trade deal, putting to bed the uncertainty over the impact of President Trump’s standoff with China.

The posturing between the United States and China was nothing more than political jockeying in order to reach a favourable outcome for the United States. Had both countries been stubborn enough to walk away from the table permanently the ramifications could have been dramatic. No doubt the President’s negotiating tactic is high risk, that I do not dispute. A complete breakdown in negotiations could have had a fundamental and negative impact on many industries and companies.

It has been proven that a market fall by 4% over two days off the back of a Donald Trump tweet, is a ridiculous overreaction. On November 28, 2019, the ASX200 hit a fresh all-time high of 6864 points, before falling by 4% to 6606 points on 4 December 2019.

With a trade deal now signed, at the time of writing, the market has essentially regained the lost territory and sits at around 6846 points. This potentially now paves the way for new highs to be achieved over the Christmas break, traditionally known as the ‘Santa rally’.

I reiterate the comments made in my December 5, blog, long-term investors should never concern themselves with short term noise and remember that quality companies will always perform according to their fundamentals over the long-term. To leave you with yet another Warren Buffet quote:

“Only buy something that you’d be perfectly happy to hold if the market shuts down for 10 years.”

Have a lovely Christmas everybody. Enjoy the time with friends and families and above all else, stay safe.