LONDON: Stock markets surged Monday after US President Donald Trump and Chinese counterpart Xi Jinping agreed upon the sidelines of the G20 summit to restart trade talks, reviving aims of an end to their tariff war.
Trump’s historic visit to North Korea also at the weekend, where he met leader Kim Jong Un, additionally soothed geopolitical concerns and propelled the dollar, as investors shunned havens, particularly gold.
Oil prices also rallied after OPEC and its oil producing allies seemed firmly on course to increase their oil output caps.
“European markets are uniformly higher, particularly the heavily China-exposed DAX” index in Frankfurt, noted Fiona Cincotta, a senior market analyst at City Index trading group.
German stocks were supported also by official data showing unemployment in Germany held steady in June.
US stocks were also solidly higher, with the DJIA index gaining two hundred and fifty points at the opening bell.
“US stocks are nicely higher in early action to begin the third quarter, with global markets rallying on the weekend’s G-20 summit in Japan that delivered a trade truce between the US and China that agreed to hold off on implementing further tariffs,” analysts at Charles Schwab said.
Trump said negotiations to fix the standoff between the US and China — the world’s 2 biggest economies — were “back on track,” adding that he would hold off imposing threatened new levies on Chinese goods.
Trump also signalled a softer position on Chinese telecom giant Huawei, a major bone of contention in the row, by stating US companies could sell equipment “where there’s no great national security problem.”
China in the meantime pledged to buy more US agricultural machinery.
The news was welcome after Trump sparked volatility on markets in early May with his shock decision to hit China with new tariffs and stop talks that had appeared to be nearing a positive end.
“Investors heaved a massive, but exhausted, sigh of relief that both the US and China opted to push the reset button and restart trade negotiations amidst other pleasantries — now we’ll have to see whether it all sticks,” said Stephen Innes at Vanguard Markets.
Elsewhere on Monday, the WTI oil price jumped back above $60 per barrel after OPEC giant Saudi Arabia and non-cartel producer Russia said they would expand caps on crude output.
“Everyone supported the proposition to extend for nine months the limits agreed in December,” Russian Energy Minister Alexander Novak said to reporters after a gathering of oil ministers and before the cartel’s main meeting later Monday.
WTI, the New York benchmark, climbed above $60 at the beginning since the end of May, before easing back a little.