[Image: Ticker / CC]
Global financial markets experienced a significant rally today following the announcement of a landmark trade agreement between the United States and China.
The deal, brokered during high-level talks in Geneva, involves a substantial reduction in tariffs, alleviating fears of a prolonged trade war that had previously rattled global markets.
Under the terms of the agreement, the United States has committed to reducing its tariffs on Chinese imports from 145% to 30%. In return, China will lower its tariffs on U.S. goods from 125% to 10%.
Additionally, the U.S. has agreed to revise three executive orders that had levied a combined 115% in tariffs on Chinese imports, reducing them to 10% for a 90-day period. China has reciprocated by removing most of its post-April 2 tariffs, leaving only the 10% rate in place, while earlier tariffs and separate duties, such as those on electric vehicles and metals, will remain. Both nations have expressed a shared interest in avoiding further fragmentation of global trade.
Financial markets responded positively to the news. U.S. stock futures surged, with the S&P 500 and Nasdaq futures climbing up to 3.5%. The Dow Jones Industrial Average also posted significant gains, reflecting investor optimism. The CBOE Volatility Index, a measure of market fear, briefly dropped below 20 points, signalling reduced market anxieties.
Tech and chipmakers like Nvidia, AMD, and Marvell Technology posted substantial premarket gains, while energy stocks rose with crude oil prices. However, pharmaceutical stocks such as Pfizer and Johnson & Johnson fell over 2% amid President Trump’s plan to lower prescription drug costs.
Analysts have expressed cautious optimism regarding the agreement. Some have highlighted the surprisingly positive scope of the deal and its potential benefit to global economies and markets. However, others remained sceptical about long-term stability, warning of lingering uncertainties.
Experts noted that while the agreement raises market confidence and hopes for continued negotiations, the 90-day pause is temporary, and unresolved issues could reemerge if no comprehensive deal is reached.
The U.S.-China trade agreement marks a significant de-escalation in the ongoing trade conflict between the two largest economies in the world.
While the 90-day pause provides temporary relief, the global markets remain sceptical, awaiting further developments.
[Source: Reuters & Business Recorder]
