Global stocks soared on Monday, while gold and safe-haven currencies dropped against a strengthening dollar, following an agreement between the US and China to temporarily reduce harsh tariffs and work together to prevent further economic disruptions. The agreement, which came after talks in Geneva, saw both countries agreeing to reduce tariffs over a 90-day negotiation period. The US would lower its tariffs on Chinese imports from 145 percent to 30 percent, while China would cut its tariffs from 125 percent to 10 percent.
This trade breakthrough sparked significant rallies on Wall Street, with the S&P 500 climbing 3.3 percent, and the Nasdaq Composite advancing 4.4 percent. The Dow Jones Industrial Average surged 1,160.72 points, or 2.81 percent, to close at 42,410.10, marking its highest close since March 26. The upbeat news on the trade front boosted investor sentiment, lifting global equity markets and brightening the outlook for both the US and global economies.
In a joint statement, the US and China emphasized the importance of their trade relationship to both nations and the broader global economy. This cooperative tone from both sides further lifted market optimism, as it suggested that a full-blown trade war might be averted, and the global economic landscape could stabilize.
Meanwhile, the US dollar strengthened across the board, recovering from its three-year low last month, with an index tracking the dollar against major currencies rising by almost 1.17 percent. The retreat from safe-haven assets led to the Japanese yen falling by 2.1 percent, bringing it to 148.39 per dollar. Similarly, the Swiss franc lost 1.8 percent, providing relief to Swiss exporters and benefiting the country’s central bank, which had previously been concerned about the strength of its currency.
As markets responded positively to the trade deal, investors turned away from traditionally safe investments like gold and the yen, shifting their focus to riskier assets in anticipation of a more stable economic environment. The overall market rally indicated investor confidence in the renewed US-China cooperation and the potential for reduced trade tensions.
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