LONDON: Stock markets, the dollar and oil prices rallied on Monday (May 12) after Chinese and US officials slashed tit-for-tat tariffs for 90 days, fuelling hopes the two sides will pull back from a standoff that has rattled global markets.
Hong Kong’s stock market closed up 3 per cent in reaction, while Paris led the way in Europe, gaining 1.4 per cent in midday deals.
The big gainer in the French capital was luxury giant LVMH, the maker of Louis Vuitton handbags, whose shares were up nearly 7 per cent.
The dollar rallied against the euro, yen and British pound, while oil prices jumped around three per cent.
“The market was not expecting the big change to US and China tariff rates, which is very positive for the outlook for the US and the global economy,” said Kathleen Brooks, research director at traders XTB.
“The impact of tariffs on growth will now need to be revised lower, which is boosting the dollar … Safe havens like gold are also seeing demand slip away,” she told AFP.
Investors have been on a rollercoaster ride since US President Donald Trump unveiled eye-watering tolls on trading partners on Apr 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.
Trump had hiked the measures against China to 145 per cent, which were met with retaliatory rates of 125 per cent.
However, after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending a crisis that fuelled fears of a global recession.
In a joint statement, the United States said it would reduce tolls to 30 per cent while Chinese tariffs on American goods would be cut to 10 per cent.
Investors are awaiting the release this week of data on US inflation and retail sales, which will provide a fresh snapshot of the world’s biggest economy since the tariffs were first unveiled.
