Wall Street stocks surged early Monday after the United States and China sharply de-escalated their trade war that has weighed on the global growth outlook.
All three major U.S. indices rallied on the announcement, which will drastically cut the tariffs enacted between the trading partners for 90 days as negotiations continue.
About 20 minutes into trading, the Dow Jones Industrial Average was up 2.5 per cent at US$42,263.44.
The broad-based S&P 500 also gained 2.5 per cent to $5,801.40, while the tech-rich Nasdaq Composite Index climbed 3.3 per cent to $18,518.36.
President Donald Trump had imposed tariffs on Chinese imports of 145 per cent, while Beijing hit back with duties of 125 per cent on U.S. goods.
Following weekend talks between top officials in Switzerland, the United States agreed to lower its tariffs on Chinese goods to 30 per cent while China will reduce its own to 10 per cent.
Investors “just want good news. They got good news,” said Steve Sosnick of Interactive Brokers.
“If we were thinking very objectively, we would say, well, 30 per cent is still quite high, and still quite inflationary,” Sosnick said. “But, again, it’s better than where we were before.”
Gains were fairly broad-based, but especially big winners included Amazon, up seven per cent; Lululemon Athletica, up 8.3 per cent; Mattel, up 9.6 per cent; and Nike, up 6.4 per cent.
