Trump-China trade war: Global stock markets surge on tentative deal

Traders are having a happy
Monday.
Richard
Drew/AP

• Global stock markets rip higher after US and China
  agreed to 90-day trade truce.
• All major Chinese indexes are higher by 2.5% or more,
  while European stocks are seeing similar gains.
• In the US, futures are pointing to 2% gains for all
  three major share indexes.
• “While bulls seem to be well in control for now,
  investors need to know that what was achieved is only a
  short-term relief to markets,” Hussein Sayed, chief market
  strategist at FXTM said.

Global
markets are ripping higher Monday morning as investors cheer
a thawing of trade relations between the US and China over the
weekend.

Presidents Trump and Xi
came to a tentative truce on trade at the G20 summit in Buenos
Aires, Argentina, postponing the next round
of tariffs and agreeing to a 90-day window for further
discussions.

This means that the US will not raise the 10% tariff rate
on $200 billion worth of Chinese goods to 25% on January 1, as
originally scheduled, while in return China has committed to
buying a “very substantial amount of agricultural, energy, (and)
industrial” goods from the US.

While the meeting didn’t exactly provide an end to the
trade war, the agreement represents a forward step in relations,
and has been cheered by investors as a result.

By the close of trading in Asia, all major Chinese indexes
were higher by more than 2.5%, with the Shenzhen Composite index
climbing furthest, ending the day 3.3% in the green.

Read more:
Trump says China will ‘reduce and remove tariffs’ on car imports
from the US

In Europe, where markets have been open for just under 30
minutes, stocks have also surged, with the majority of indexes
also higher by more than 2%.

Futures markets are pointing to a strong day in North
America, with the Nasdaq index set to open higher by as much as
2.7% later in the day, and both the S&P and the Dow looking
likely to gain 2% or more.

Here’s are some of the stock market
highlights from across the world:

• Shanghai Composite — up 2.6%
• Hong Kong’s Hang Seng — up 2.5%
• Japan’s Nikkei 225 — up 1%
• Britain’s FTSE 100 — up 2.2%
• Germany’s DAX — up 2.7%
• US futures point to the Nasdaq gaining 2.7%, with
  S&P 500 and Dow looking set to open 2% higher.
• Brent Crude Oil — up 4.7% to $62.27 per barrel

Elsewhere in markets, oil prices
are ripping higher, helped by news of the deal. Saudi Arabia and
Russia extended their agreement to manage the market, while
Canada’s largest producing province ordered unprecedented output
curbs. OPEC, along with Russia, is expected to announce supply
cuts at its meeting on December 6.

Oil markets shrugged off news on Monday morning that Qatar will
unilaterally withdraw from OPEC effective January 1, as it reacts
to increasing political tensions with its Middle Eastern
neighbors.

Analysts urged against overexcitement however, with most
noting that this agreement is, at best, a temporary reprieve, and
does not remove any of the tariffs that are already in
place.

“While bulls seem to be well in control for now, investors
need to know that what was achieved is only a short-term relief
to markets,” Hussein Sayed, chief market strategist at FXTM said
in an email.

“Whether this will be translated into longer-term advances
depends on the path of negotiations over the next three months.
For now, one obstacle has been removed, but all longer-term risks
remain there.”

Get the latest Oil WTI price here.