- Global stock markets rip higher after US and China agreed to 90-day trade truce.
- All major Chinese indexes are higher by 2.5% or more, while European stocks are seeing similar gains.
- In the US, futures are pointing to 2% gains for all three major share indexes.
- “While bulls seem to be well in control for now, investors need to know that what was achieved is only a short-term relief to markets,” Hussein Sayed, chief market strategist at FXTM said.
Global markets are ripping higher Monday morning as investors cheer a thawing of trade relations between the US and China over the weekend.
Presidents Trump and Xi came to a tentative truce on trade at the G20 summit in Buenos Aires, Argentina, postponing the next round of tariffs and agreeing to a 90-day window for further discussions.
This means that the US will not raise the 10% tariff rate on $200 billion worth of Chinese goods to 25% on January 1, as originally scheduled, while in return China has committed to buying a “very substantial amount of agricultural, energy, (and) industrial” goods from the US.
While the meeting didn’t exactly provide an end to the trade war, the agreement represents a forward step in relations, and has been cheered by investors as a result.
By the close of trading in Asia, all major Chinese indexes were higher by more than 2.5%, with the Shenzhen Composite index climbing furthest, ending the day 3.3% in the green.
In Europe, where markets have been open for just under 30 minutes, stocks have also surged, with the majority of indexes also higher by more than 2%.
Futures markets are pointing to a strong day in North America, with the Nasdaq index set to open higher by as much as 2.7% later in the day, and both the S&P and the Dow looking likely to gain 2% or more.
Here’s are some of the stock market highlights from across the world:
- Shanghai Composite – up 2.6%
- Hong Kong’s Hang Seng – up 2.5%
- Japan’s Nikkei 225 – up 1%
- Britain’s FTSE 100 – up 2.2%
- Germany’s DAX – up 2.7%
- US futures point to the Nasdaq gaining 2.7%, with S&P 500 and Dow looking set to open 2% higher.
- Brent Crude Oil – up 4.7% to $62.27 per barrel
Elsewhere in markets, oil prices are ripping higher, helped by news of the deal. Saudi Arabia and Russia extended their agreement to manage the market, while Canada’s largest producing province ordered unprecedented output curbs. OPEC, along with Russia, is expected to announce supply cuts at its meeting on December 6.
Oil markets shrugged off news on Monday morning that Qatar will unilaterally withdraw from OPEC effective January 1, as it reacts to increasing political tensions with its Middle Eastern neighbors.
Analysts urged against overexcitement however, with most noting that this agreement is, at best, a temporary reprieve, and does not remove any of the tariffs that are already in place.
“While bulls seem to be well in control for now, investors need to know that what was achieved is only a short-term relief to markets,” Hussein Sayed, chief market strategist at FXTM said in an email.
“Whether this will be translated into longer-term advances depends on the path of negotiations over the next three months. For now, one obstacle has been removed, but all longer-term risks remain there.”