– May 22, 2018 @ 7:20am
NEW YORK: Global stock markets got a bounce Monday after the US and China effectively called a truce in what had been a spiraling trade dispute, letting investors heave a sigh of relief.
Analysts said China made no concrete commitments but still won at least a temporary reprieve from the Trump team, which looming US import tariffs off the table.
Treasury Secretary Steven Mnuchin told “Fox News Sunday” that “right now, we have agreed to put the tariffs on hold.” Xinhua quoted China’s Vice Premier Liu He as saying “the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”
Even though details were sketcky, Wall Street took the opportunity to kick off the week with a rally, with industrial stocks that had been seen as most vulnerable to a trade war lifting the benchmark Dow Jones Industrial Average higher.
The Dow closed up almost 300 points, adding 1.2 percent. Aircraft giant Boeing, a major supplier to China, jumped 3.6 percent. United Technologies grew 2.3 percent and Caterpillar gained two percent.
“We don’t really know the details of this agreement,” Peter Cardillo of Spartan Capital told AFP, “but the market is very sensitive to the trade war threat and investors think the negotiations seem to be going in the right direction.”
General Electric gained 0.3 percent after announcing it would merge its transport business with the rail transport business Wabtec in an $11.1 billion deal.
Among those unable to celebrate the apparent trade truce were metal stocks that had stood to gain from reduced Chinese imports: AK Steel fell 5.1 percent and US Steel sank 3.8 percent.
Elsewhere, London stocks ended the session with a gain of one percent and Paris closed 0.4 percent higher, while Frankfurt was shut for a public holiday.
The Milan stock market however dropped 1.5 percent amid concerns that Italy is inching towards becoming the first EU founding member to have a eurosceptic government.
In Asia, the Hang Seng, Nikkei and Shanghai Composite all recorded solid gains.
Traders are also awaiting the release on Wednesday of minutes from the US Federal Reserve’s last policy meeting, hoping for fresh clues about its plans for raising interest rates.
Continuing improvement in the US economy and signs of rising inflation have fanned expectations the central bank will lift borrowing costs four times this year. — AFP