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Markets Cheer, Tentatively, After U.S.-China Trade Truce Global Markets Rise After U.S. and China Put Trade War on Hold
(35 minutes later)
LONDON — Markets in Asia and Europe rose on Monday after President Trump and President Xi Jinping of China reached a truce in the two countries’ trade war, a sign of exuberance among investors that was tempered by a broad consensus that the fragile peace might not last long.LONDON — Markets in Asia and Europe rose on Monday after President Trump and President Xi Jinping of China reached a truce in the two countries’ trade war, a sign of exuberance among investors that was tempered by a broad consensus that the fragile peace might not last long.
Chinese shares led the rise, climbing as much as 3 percent in morning trading, with the market in Hong Kong following closely. Investors elsewhere were more restrained, sending shares up less than 2 percent in Australia, Japan and South Korea.Chinese shares led the rise, climbing as much as 3 percent in morning trading, with the market in Hong Kong following closely. Investors elsewhere were more restrained, sending shares up less than 2 percent in Australia, Japan and South Korea.
Markets in Europe followed a similar trajectory, with many of the region’s benchmarks up more than 2 percent in early trading.Markets in Europe followed a similar trajectory, with many of the region’s benchmarks up more than 2 percent in early trading.
Futures contracts that try to predict the performance of the S&P 500 were up more than 1 percent early in the day, suggesting that Wall Street would also open with a bounce.Futures contracts that try to predict the performance of the S&P 500 were up more than 1 percent early in the day, suggesting that Wall Street would also open with a bounce.
Other markets responded in kind to the truce, which was reached Saturday in Buenos Aires. Soybeans rose on commodities markets on the prospect that China would begin to buy American-grown crops again. China’s currency, the renminbi, strengthened against the United States dollar.Other markets responded in kind to the truce, which was reached Saturday in Buenos Aires. Soybeans rose on commodities markets on the prospect that China would begin to buy American-grown crops again. China’s currency, the renminbi, strengthened against the United States dollar.
The détente, forged over a dinner between the leaders of the world’s two largest economies, merely postpones a larger reckoning over trade. Under the deal, the United States will postpone an increase in tariffs that were set to be imposed Jan. 1, and it sets a March 1 deadline for the countries to reach a more extensive pact.The détente, forged over a dinner between the leaders of the world’s two largest economies, merely postpones a larger reckoning over trade. Under the deal, the United States will postpone an increase in tariffs that were set to be imposed Jan. 1, and it sets a March 1 deadline for the countries to reach a more extensive pact.
The deal leaves in place American tariffs on $250 billion in Chinese goods and the retaliatory measures enacted by Beijing. It is unclear whether the countries can resolve such thorny questions as the Chinese government’s support for sensitive industries and protections for American-created intellectual property.The deal leaves in place American tariffs on $250 billion in Chinese goods and the retaliatory measures enacted by Beijing. It is unclear whether the countries can resolve such thorny questions as the Chinese government’s support for sensitive industries and protections for American-created intellectual property.
By day’s end in Asia, shares in Shanghai had closed up 2.57 percent, and Hong Kong shares were up 2.55 percent. South Korean shares were up 1.67 percent. In Tokyo, the Topix finished up 1.3 percent, and the Nikkei 225 rose 1 percent.By day’s end in Asia, shares in Shanghai had closed up 2.57 percent, and Hong Kong shares were up 2.55 percent. South Korean shares were up 1.67 percent. In Tokyo, the Topix finished up 1.3 percent, and the Nikkei 225 rose 1 percent.
In early trading in Europe, the Euro Stoxx 50, a measure of European blue-chip companies, was up about 2 percent, as was the CAC 40 in France. The FTSE 100 in Britain rose more than 2 percent, and Germany’s Dax was up almost 2.5 percent.In early trading in Europe, the Euro Stoxx 50, a measure of European blue-chip companies, was up about 2 percent, as was the CAC 40 in France. The FTSE 100 in Britain rose more than 2 percent, and Germany’s Dax was up almost 2.5 percent.
But given the issues that remain unresolved between China and the United States, investor enthusiasm may be fleeting.But given the issues that remain unresolved between China and the United States, investor enthusiasm may be fleeting.
“We anticipate that things are still likely to get worse before they get better,” Kerry Craig, global market strategist for the asset management arm of JPMorgan, said in an emailed statement.“We anticipate that things are still likely to get worse before they get better,” Kerry Craig, global market strategist for the asset management arm of JPMorgan, said in an emailed statement.
“Small rays of light such as this create tactical opportunities for investors,” he added, “but on balance we would be more cautious on positioning heading into 2019.”“Small rays of light such as this create tactical opportunities for investors,” he added, “but on balance we would be more cautious on positioning heading into 2019.”
Chinese investors were perhaps more cheered in part because the official media there de-emphasized the temporary nature of the agreement. It also played down continued areas of disagreement, such as intellectual property protections.Chinese investors were perhaps more cheered in part because the official media there de-emphasized the temporary nature of the agreement. It also played down continued areas of disagreement, such as intellectual property protections.