Markets rise as Xi calms trade war fears
AFP – Stock markets across the world sprang higher Tuesday following a conciliatory speech by Chinese President Xi Jinping that reassured investors a trade war with the United States could be avoided.
Following boosts to stock market indices across Asia and Europe, US benchmarks also shot higher, with the Dow finishing up nearly two percent.
Xi pledged to lower tariffs on auto imports this year and take other steps to open the world’s number two economy "wider and wider," addressing major complaints by the United States in an escalating trade row.
US President Donald Trump hailed Xi’s "kind words," although the White House made clear that concrete follow-up steps would be needed. Some analysts considered Xi’s speech largely a rehash of earlier statements, with little new to offer.
The detente follow a series of tit-for-tat threats by the US and China to impose retaliatory tariffs on one another that have rattled markets in recent weeks.
Dealers pounced on the comments from Xi and Trump as a sign that a possible trade war between the world’s top two superpowers can be averted, after weeks of nail-biting uncertainty.
Equity markets in London, Paris and Frankfurt all rose around one percent.
US indices were led by the Nasdaq, which shot up 2.1 percent, in part due to a 4.5 percent gain in Facebook, as the company faced scrutiny in a Capitol Hill hearing.
"Xi cautioned against a cold war mentality and stated the China should push for free trade and uphold a multilateral trading system," wrote David Cheetham, chief market analyst at XTB.
He noted that most of the tariffs have yet to be finalized "and the comments from Xi seem to suggest that he is keen to avoid any further escalation."
Pantheon Economics said they continue to have reservations about the longer term "but the details heighten our conviction that China and the US will produce a grand bargain and avert the imposition of any significant tariffs this year."
Besides greater optimism on trade, stocks also were propelled by a more than three percent gain in oil prices, in part due to the improved US-China interactions.
– Key figures around 2100 GMT –
New York – Dow: UP 1.8 percent at 24,408.00 (close)
New York – S&P 500: UP 1.7 percent at 2,656.87 (close)
New York – Nasdaq: UP 2.1 percent at 7,094.30 (close)
London – FTSE 100: UP 1.0 percent at 7,266.75 (close)
Frankfurt – DAX 30: UP 1.1 percent at 12,397.32 (close)
Paris – CAC 40: UP 0.8 percent at 5,307.56 (close)
EURO STOXX 50: UP 0.7 percent at 3,439.30 (close)
Tokyo – Nikkei 225: UP 0.5 percent at 21,794.32 (close)
Hong Kong – Hang Seng: UP 1.7 percent at 30,728.74 (close)
Shanghai – Composite: UP 1.7 percent at 3,190.32 (close)
Euro/dollar: UP $1.2354 from $1.2321 at 2100 GMT on Monday
Dollar/yen: UP at 107.19 yen from 106.77
Pound/dollar: UP at $1.4174 from $1.4131
Oil – Brent North Sea: UP $2.39 at $71.04 per barrel
Oil – West Texas Intermediate: UP $2.09 at $65.51 per barrel