In This Article:
Stocks jumped on Monday, on the back of the news that the US and China had agreed to temporarily cut tariffs on each other, marking a de-escalation in trade tensions.
US Treasury secretary Scott Bessent said on Monday morning that the US and China had agreed to lower their tariffs on each other's imports by 115% for 90 days, following negotiations in Switzerland over the weekend.
Markets rose following the announcement, with the UK's FTSE 100 (^FTSE) advancing 0.6%, while the pan-European STOXX 600 (^STXE) gained nearly 1%. Meanwhile, US stock futures rallied, with those tied to the S&P 500 (ES=F) soaring 3%, contracts on the Nasdaq 100 (NQ=F) rocketing nearly 4% and Dow Jones Industrial Average futures (YM=F) surged 2.4%.
Monday's agreement offered some relief to investors who were concerned about the economic impact of US president Donald Trump's escalating trade war with China.
Read more: Stocks to watch this week: Alibaba, Walmart, Burberry, Imperial Brands and Tui
The move will lower American tariffs on Chinese goods, which currently run as high as 145%, to 30% and slash China's retaliatory duties from 125% to 10%.
At the same time, uncertainty remains over the nature of a longer-term deal, while other US trading partners are also trying to secure agreements.
George Lagarias, chief economist at Forvis Mazars, said: "Such deals, limited in scope and time and thin on detail, may be good short-term news, especially for financial markets, but they may not be enough to outweigh increasing uncertainty.
"Despite a very positive market reaction to the US-China pause it would be premature to celebrate a breakthrough in the global trade impasse.
"A 'business deal' with the UK and a “pause” with China don’t constitute comprehensive 'trade deals'. Time will show whether the global supply chain is robust enough to sustain such uncertainty without a costly and inflationary adjustment to cover uncertain outcomes."
He added: "A 10% tariff base scenario between the US and the rest of the world, is still an adverse economic outcome.”
Do you think the US and China will continue this rate of progress on trade talks? Vote in the poll below.
Yahoo UK's poll of the week lets you vote and indicate your strength of feeling on one of the week's hot topics. After the poll closes, we'll publish and analyse the results each Friday, giving readers the chance to see how polarising a topic has become and if their view chimes with other Yahoo UK readers.
Read more:
Download the Yahoo Finance app, available for Apple and Android.