Stock market futures soar after U.S. and China suspend tariffs for 90 days
Stock futures saw a significant surge after the United States and China announced a temporary truce in their ongoing trade war. The agreement involved suspending steep tariffs for a period of 90 days. This development came after a meeting in Switzerland over the weekend that included U.S. Treasury Secretary Scott Bessent, U.S. Trade Administrator Jamieson Greer, and Chinese negotiators.
As part of the deal, the U.S. reduced its tariffs on Chinese imports to 30% from levels as high as 145%, while China reciprocated by cutting its tariffs on American goods to 10% from 125%. The news of these tariff reductions caused a positive reaction in the stock market, with S&P 500 futures up by 3.2%, Dow Jones Industrial Average futures soaring over 1,000 points, or 2.5%, and Nasdaq Composite futures jumping by 4%.
Equities analyst Adam Crisafulli, head of Vital Knowledge, noted that while the lower tariffs are only temporary, the news was seen as an upside surprise for investors. The temporary reductions effectively brought the level of U.S. tariffs on Chinese goods down to around 30%, while China’s tariffs on American imports were reduced to 10%.
The positive sentiment also spread to global stock markets, with Hong Kong’s market surging by 3%, Germany’s DAX gaining 1%, France’s CAC 40 in Paris adding 0.8%, and Britain’s FTSE 100 ticking up by 0.1%. Despite the optimism surrounding the temporary truce, some market analysts cautioned that uncertainties still lie ahead.
Mark Williams, chief Asia economist with Capital Economics, acknowledged the substantial de-escalation in tensions between the U.S. and China but highlighted that the U.S. still maintains higher tariffs on Chinese goods compared to other countries. There are also concerns that the U.S. may continue to rally other countries to impose restrictions on trade with China.
In conclusion, while the temporary truce between the U.S. and China has brought relief to the stock market and global economy, the future remains uncertain. It will be crucial to monitor how the trade negotiations evolve and whether a more permanent solution can be reached to resolve the ongoing trade conflict.
