Global shares rallied, while gold and safe-haven currencies slumped against a resurgent dollar yesterday as the US and China agreed to temporarily slash harsh reciprocal tariffs and cooperate to avoid rupturing the global economy.
Following weekend talks in Geneva, both sides agreed that the US would drop levies on Chinese imports from 145 per cent to 30pc during a 90-day negotiation period and China would cut duties from 125pc to 10pc.
Wall Street stocks were set for significant daily gains, with the S&P 500 index jumping 2.4pc and the tech-focused Nasdaq Composite advancing 3.4pc.
In a joint statement yesterday, Washington and Beijing said they recognised the importance of their bilateral trade relationship to both countries and the global economy, in language that analysts said had brightened the market outlook.
An index tracking the dollar against other major currencies rose further from last month’s three-year trough with an almost 0.96pc gain, while Japan’s yen fell 2pc to 148.2 per dollar .
The retreat from haven assets pushed Switzerland’s franc 1.4pc lower on the day, in a jolt of relief for Swiss exporters and the nation’s central bank.
Spot gold prices, which hit an all-time high of $3,500 last month and often move inversely to the dollar, fell 2.6pc to $3,237.4 an ounce.
“This is a textbook recovery after the market’s waterfall declines,” said Gina Bolvin, the president of Bolvin Wealth Management Group in Boston. “The market is blowing through resistance levels and if it sticks, this is a big ‘WIN’ for Trump, for stocks and for investors.”
The euro, which surged in April as investors questioned the dollar’s long-held status as the world’s reserve currency, was 1.2pc lower at $1.1113.
Kit Juckes, chief FX strategist at Societe Generale, said the tariff pause was a “substantial relief” for the US and China.
With tariff anxiety having already caused some Chinese exporters to consider their futures, data this weekend showed the nation’s factory-gate prices had dropped by the most in six months in April.
Trump’s erratic trade policies had also sparked fears over US corporate earnings, with investors having entered this week nervous about an impending update from retail giant Walmart after a slew of US multi-nationals pulled their forecasts.
Yesterday, however, commodities traders rushed to reassess the recessionary risks of tariff uncertainty, with oil traders pricing Brent crude for delivery next month almost 2.4pc higher at $65.43 a barrel, up from around $57 a week ago.
Europe’s regional STOXX 600 was last trading 1.1pc higher and Hong Kong’s Hang Seng Index ended the day with an almost 3pc gain.
While Trump’s April 2 tariff announcement initially caused world stocks to drop sharply, MSCI’s index of global shares , which is US-dominated, was trading back at levels last seen in late March and was up 1.8pc.
Some analysts and investors warned, however, that this was not the end of unpredictable trade talks between the White House and Beijing and that any relief may soon be overshadowed by data showing the US economy had slowed.
&uuid=(email))