The world’s two largest economies, the United States and China, announced an agreement to temporarily halt their trade war by suspending tariffs imposed by both sides for 90 days. Under the agreement, China will reduce tariffs imposed on the United States from 125% to 10%, while the United States will reduce its tariffs on Chinese goods from 145% to 30%.
The two sides announced identical statements Monday morning, stating that their agreement will take effect in the next two days, before May 14. China also announced that it will cancel or suspend the non-tariff countermeasures it imposed since April 2, while US Treasury Secretary Besant indicated that both sides agree that neither side desires to disengage, and that the high tariffs were a ban that neither side wanted.
This agreement supported global markets, which responded with strong gains in the opening session on Monday, as market concerns about slowing global economic growth and rising inflation, which have plagued markets since early April after Trump escalated and declared a comprehensive trade war, receded. Asian stock markets in China and Japan rose, with the Shanghai Composite and Hang Seng Indexes recording gains of more than 0.80% and 2.98%, respectively, while Japan’s Nikkei Index rose by about 0.38%.
Most European stocks rose by more than 1% after opening on Monday, with the German DAX rising 1.07%, the French CAC 40 rising 1.34%, and the British FTSE gaining 0.43%.
US indices and futures indexes recorded strong gains in pre-opening prices, with the Dow Jones Industrial Average rising 2%, the S&P 500 rising 2.7%, and the Nasdaq rising 3.81%.
The US dollar index rose nearly 1%, trading at a one-month high of 101.30, and also trading at a one-month high against the euro and the Japanese yen. The yellow metal, in turn, lost 2.80%, or $93, since the opening bell, as risk appetite in the markets increased and safe-haven demand declined, trading at $3,231 per ounce. Silver lost 1.40%, trading at $32.24 per ounce. Oil rose $2.93, with Nymex crude trading at $62.81 per barrel, and Brent crude rose 2.75%, trading at $65.67 per barrel, benefiting from declining concerns about global growth and fuel demand from the world’s largest oil consumers.