World shares and US futures surged yesterday after the US and China announced they were suspending for 90 days most of the sharp tariff hikes each has imposed since US President Donald Trump began escalating his trade war.
For a 90-day period, the US is to cut tariffs on Chinese goods to 30 percent from as high as 145 percent, while China’s tariffs on US goods would fall to 10 percent from 125 percent, a joint statement said.
The agreement to allow time for more talks followed weekend negotiations in Geneva, Switzerland, that the US side said had made “substantial progress.”
Photo: AFP
The full impact on the tariffs and other trade penalties enacted by Washington and Beijing remains unclear, and much depends on whether they find ways to bridge differences during the suspension.
However, as trade envoys from the world’s two biggest economies blinked, finding ways to pull back from potentially massive disruptions to world trade and their own markets, investors rejoiced.
The TAIEX ended up 214.50 points, or 1.03 percent, at 21,129.54, on the back of improved market sentiment toward the US-China trade talks. Buying also focused on the bellwether electronics sector, with investors anticipating positive leads from the Computex trade show in Taipei, which is to run from Tuesday next week to Friday.
“Computex is coming,” Hua Nan Securities Investment Management Co (華南投顧) analyst Kevin Su (蘇俊宏) said. “Investors hope [artificial intelligence] chip designer Nvidia Corp CEO Jensen Huang (黃仁勳) will give positive leads in his speech at the event.”
Regional equities also climbed, with Hong Kong jumping 3 percent, while Shanghai — which closed before the tariff cuts were announced — was up 0.8 percent.
Tokyo, Sydney, Seoul and Wellington were all in the green. Paris and Frankfurt rose more than one percent, while London was also higher in early European trading.
Oil prices rallied, with US benchmark crude oil gaining US$1.66 to US$62.68 per barrel. Brent crude, the international standard, added US$1.63 to US$65.55 per barrel.
The US dollar surged against the yen, trading at 148.18 yen, up from 146.17. The euro fell to US$1.1107 from US$1.1209.
“The initial reaction to the weekend US-China talks [is] predictably encouraging,” Pepperstone Group research head Chris Weston said.
However, Bank J Safra Sarasin chief economist Karsten Junius was cautious.
“We expect financial markets to remain volatile over the coming months, as they have almost fully priced out negative economic surprises and could once again be disrupted by more serious obstacles in trade negotiations,” he said in a commentary. “In all likelihood, things may still get worse before they get better.”
Investors were also watching for developments in other flashpoints, including clashes between India and Pakistan.
The Sensex in Mumbai shot up 3.2 percent after India and Pakistan agreed to a truce after talks to defuse their most serious military confrontation in decades. Pakistan’s KSE 100 surged more than 9 percent.
Additional reporting by CNA and AFP
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