Global stocks rallied on Monday after the United States and China committed to resuming trade talks.
The truce was met with enthusiasm in Asia, where China’s benchmark Shanghai Composite and Tokyo’s Nikkei added more than 2%.
In Europe, Britain’s FTSE 100 and France’s CAC 40 rose by just under 1% in early trade, while Germany’s DAX advanced 1.6%.
President Donald Trump said over the weekend at the G20 summit in Japan that he would hold off on new tariffs on China and lift some restrictions on Chinese tech giant Huawei.
US stock futures reacted positively. The Dow was up 285 points, or 1.1%, and the Nasdaq, which includes key tech companies, rose by as much as 1.7%. The S&P 500 added 1.2%.
“The US and China are likely headed for a moderate trade deal with the US focusing on verifiable steps,” said Sebastien Galy, a senior macro strategist at Nordea Asset Management.
“The positive stance taken by the market is therefore warranted and the odds of another full blown conflict have moderated as the US administration is de-escalating,” he added
Trump on Saturday appeared to reverse his hard line on Huawei, saying that “US companies can sell their equipment” to the company as long as the transactions don’t present a “national emergency problem.”
The Trump administration had banned sales of US goods to Huawei without a license in May, putting the company under pressure.
Trump and his Chinese counterpart, President Xi Jinping, also agreed to resume stalled trade negotiations. Trump had been threatening tariffs on hundreds of billions of dollars of Chinese exports.
The US president said that the dispute over Huawei would not be resolved until the final stages of trade talks.
It remains to be seen whether the initial stocks rally will be sustained. Uncertainty about whether a meaningful agreement can be finalized could loom over markets in the second half of the year.
Existing tariffs remain in place and will continue to hit businesses. And the Trump administration’s position on Huawei remains murky, which could make the tech sector jittery.
“The temporary agreement does little to resolve the fundamental conflicts over trade issues that broke down talks in May and does not amount to a sustainable solution for Huawei,” wrote analysts at Eurasia Group, a political risk consultancy.