Stock markets across US and Asia have surged on growing hopes that the ongoing US-China trade war will come to an end
US and Asian stock markets have surged on growing hopes negotiations to end the US/China trade war will result in a truce.
Values rose in New York on Tuesday – especially in technology and banking stocks – when US President Donald Trump confirmed he would be willing to relax the 2 March deadline for a deal, if one is close.
A new round of US tariffs, on $200bn of imports from China, is due to kick in on 1 March without an agreement.
Speaking about the deadline as further talks prepared to get underway, Mr Trump told reporters he might let it “slide for a little while”.
Earlier, the White House had called 2 March a hard deadline.
Seven months of tit-for-tat tariffs has seen the countries place additional costs on goods worth over $400bn in total to date, while the US president has threatened to target all $500bn of Chinese imports.
The main stumbling block has been Washington’s demand that Beijing scale back plans for state-led champions in technology including robotics – seen by the US as threatening its dominance and the country’s intellectual property.
Economists have blamed the row between the world’s two largest economies for driving the slowdown in the world economy.
It has been a major factor behind a collapse in values on world stock markets in the final quarter of 2018.
There has been a tentative recovery so far in 2019 though Brexit uncertainty and the recent partial US government shutdown have also helped put a lid on sentiment.
Traders said political progress in Washington on the shutdown issue was another positive for investors on Tuesday after Mr Trump signalled further disruption was unlikely because of a tentative deal with Democrats over funding for his controversial border wall plan.
The S&P 500 closed 1.3% up while the Dow Jones Industrial Average was 1.5% higher.
The mood extended to Asia on Wednesday as China’s Shanghai Composite hit levels not seen since November while the Nikkei in Japan was 1.5% up.
European markets were more cautious, with the FTSE 100 up 0.5% in late morning trade.
Jasper Lawler, head of research at London Capital Group, said that whilst there have been positive reports regarding the trade talks investors were getting nervous of the nearing deadline and no solid evidence of progress.
Negative sentiment is unwinding, and investors are showing that they are prepared to put risk back on the table, Lawler said. For sentiment to remain positive there is a need of evidence of a deal in March. However, for now markets are willing to let this pass.