Source: Sharecast
By 1001 in New York. the Dow was up nearly 1,000 points (+2.4%) at 42,241, the S&P 500 rose 2.5% to 5,804, while the Nasdaq jumped 3.4% to 18,538. The S&P 500 and Nasdaq, in particular, were both trading at levels not seen since the first week of March.
The US and China are to significantly lower tariffs, it was confirmed on Monday, after a key agreement was struck in Geneva over the weekend. The world’s two largest economies will now cut levies for the next 90 days. Washington will reduce tariffs on Chinese goods to 30% from 145%, while Beijing will lower duties to 10% from 125%.
Speaking at a press conference in Geneva, US Treasury secretary Scott Bessent said: “We want more balanced trade, and I think both sides are committed to achieving that.”
“Tariffs at 30% on Chinese goods are better than tariffs at 145%, but 30% is still a hefty sum, which could hit the consumer and the inflation rate down the line. However, optimism is the order of the day, especially for stock markets,” said Kathleen Brooks, research director at XTB.
Global stock markets reacted positively to the news, along with the dollar, while WTI crude surged 3.3% to $63.03 a barrel. However, gold, a safe-haven asset that has soared in recent weeks, fell back nearly 3% to $3.246.90 an ounce.
“Some people thought the best-case outcome from the weekend’s discussions would be an agreement to simply keep talks going. Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise,” said Russ Mould, investment director at AJ Bell.
No major economic data was scheduled for release on Monday, with eyes starting to turn to the all-important US inflation report on Tuesday. According to consensus estimates, the CPI index is expected to have risen by 0.3% in April after a 0.1% decline in March, though both the annual rates of headline and core inflation are tipped to have held steady at 2.4% and 2.8% respectively.
Market movers
Banking stocks were rising strongly on improved economic prospects following the US-China trade talks, including Bank of America, Citigroup and JPMorgan.
Tech heavyweights Apple, Nvidia and Microsoft were benefitting from a return in risk appetite.
Meanwhile, US-listed shares of Canada’s Pan American Silver slumped 15% after the company agreed to acquire smaller rival MAG Silver in a $2.1bn deal.