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Reuters
12-05-2025
- Business
- Reuters
Investors cheer US-China tariff truce, but cautious over a final deal
LONDON/SHANGHAI, May 12 (Reuters) - A breakthrough in U.S.-China trade talks has propelled world stocks and the dollar higher, but investors fear further negotiations could prove a long slog, tempering optimism, as risks of a global economic slowdown persist. Speaking after two days of talks with Chinese officials in Geneva, U.S. Treasury Secretary Scott Bessent said on Monday the two sides had agreed a 90-day pause on measures and that tariffs would fall by over 100 percentage points. That leaves U.S. tariffs on Chinese goods at 30% from May 14 to August 12 and Chinese duties on U.S. imports at 10%, beating investors' best-case scenarios going into the talks. The dollar jumped by the most in almost a month against a basket of major currencies , as the yen and Swiss franc fell along with other safe-haven assets like gold and government bonds. S&P 500 stock futures leapt almost 3%, suggesting a hefty rally at the opening bell, while U.S. Treasury prices sagged, sending yields to one-month highs above 4.4% . But relief that the worst of a global trade war could be avoided was tempered by caution, given a more permanent deal needs to be struck and that higher tariffs overall are still likely to weigh on the global economy. "It's long-term positive plus 90 days of uncertainty," said Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management Co. Michael Metcalfe, head of macro strategy at State Street Global Markets in London, estimated that Monday's U.S.-China trade deal implied an average effective tariff rate of around 15%. "Given where expectations were, it's a net positive," he said. "You basically reverse the reciprocal tariff announcement, and if you reverse the reciprocal tariff announcement you are back to square one." After taking office in January, U.S. President Donald Trump had imposed tariffs of 145% on imports of Chinese goods, with China in turn raising tariffs on U.S. goods to 125% and limiting exports on some vital rare earth minerals. Those measures had brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains and sparking fears of an immediate cratering of the global economy. Trump's April 2 "Liberation Day" announcement of sweeping tariffs on China and others sparked a sharp exit from U.S. assets, including the dollar and Treasuries - the mainstays of the global financial system - before being paused. Heightened uncertainty caused by U.S. trade policy has hurt business and consumer confidence. The dollar index, while up over 1% on Monday, remains down some 7% so far this year. Reassuring for markets are signs that Trump may be rethinking his trade strategy, given the damage caused already, as economic indicators have turned south and central bankers warn of the risk of slowing growth and rising inflation. A deal last week with Britain, plus positive noises from Japan, Vietnam and South Korea, have helped restore some confidence, along with a cooling in geopolitical tensions. U.S. stocks are already roughly where they were prior to April 2, while beneficiaries of the "sell America" trade, such as European and Chinese stocks have given up a big chunk of those gains (.STOXX), opens new tab, (.CSI300), opens new tab. "This is only a three-month temporary reduction of tariffs. So this is the beginning of a long process," Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, said. "The two sides will spend months probably, to come up with a resolution, or reach a final trade deal, but this is a very good starting point." Rabobank's head of FX strategy Jane Foley said there was more optimism that the tariffs will not have the devastating impact many had feared, but this did not mean a return to the pre-Trump status quo. "The overall scenario is not as bad as it could have been, but we still have a fair amount of uncertainty about where these tariffs will settle, their impact on world growth and central bank policy," she said. State Street's Metcalfe said as uncertainty over trade lifts, the focus could also turn to other hot spots - such as Trump's plans for tax cuts and what that means for U.S. debt levels, especially as revenues from tariffs drop. "It (the U.S./China deal) doesn't mean the policy uncertainty has gone away, it's moved on to a new area," he said.
Yahoo
12-05-2025
- Business
- Yahoo
Stocks, dollar up as investors wait for details on Sino-US trade talks
SINGAPORE (Reuters) -The United States and China ended high-stakes trade talks on a positive note on Sunday, with U.S. officials touting a "deal" to reduce the U.S. trade deficit while Chinese officials said the sides had reached "important consensus." Wall Street stock futures climbed and the dollar firmed against safe haven peers on Monday as investors waited for a joint statement expected to be released in Geneva later in the day. Vice Commerce Minister Li Chenggang said it would contain "good news for the world." QUOTES: CHARLES WANG, CHAIRMAN OF SHENZHEN DRAGON PACIFIC CAPITAL MANAGEMENT CO, SHENZHEN "The weekend talks are better than expected. Both sides are under strong incentives, and pressure, to push forward trade talks. The U.S. is facing supply chain pressure, while China faces challenges in GDP growth. Both sides need to sit down to strike a mutually acceptable deal. "But the game will be a long process. Both sides need to determine areas of concession and persistence." JASON CHAN, SENIOR INVESTMENT STRATEGIST, BANK OF EAST ASIA, HONG KONG "If the two sides announce or establish a mechanism for regular talks going forward, or some substantial tariff cuts, then other U.S. trade partners or countries trying to make deals will have a reference point or an indicator. How the U.S.-China talks went shows what's the bottomline for both sides. "I think the talks should be quite positive and, if even China can make a deal, then other Asian countries like Japan, India, and Southeast Asian countries could follow and progress their own trade talks."
Malay Mail
12-05-2025
- Business
- Malay Mail
China stocks rally, yuan gains on Geneva trade talk optimism
SINGAPORE, May 12 — Chinese stocks rallied and the yuan strengthened on Monday, after weekend talks in Geneva between Chinese and US officials showed encouraging signs of a de-escalation in a high-stakes trade war. US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer held long talks on the weekend with senior Chinese officials led by Chinese Vice Premier He Lifeng in Switzerland. Both sides struck a positive note, with markets awaiting specific details of any early agreement later in the day. China's blue-chip CSI 300 Index extended gains to 1.1 per cent in the morning trading session, while the Shanghai Composite Index added 0.7 per cent. Hong Kong's benchmark Hang Seng Index climbed 1.5 per cent. The yuan strengthened 0.2 per cent against the dollar, while its offshore counterpart was up about 0.3 per cent in Asian trade. 'The weekend talks are better than expected. Both sides are under strong incentives, and pressure, to push forward trade talks,' said Charles Wang, Chairman of Shenzhen Dragon Pacific Capital Management Co in Shenzhen. 'But the game will be a long process. Both sides need to determine on areas of concession and persistence.' Ahead of the talks, President Donald Trump had signalled punitive US tariffs of 145 per cent on China would likely come down and even floated an alternate tariff figure of 80 per cent that he said 'seems right'. China is at the epicentre of US President Donald Trump's global trade war that has roiled financial markets, upended supply chains and fuelled risks of a sharp worldwide economic downturn. Tensions between the two sides have ratcheted higher steadily since Trump's inauguration in January, intensifying after his April 2 'Liberation Day' announcement of sweeping tariffs, with US levies on China climbing to 145 per cent and Beijing retaliating with equally hefty tariffs on US goods. China's blue-chip CSI300 Index dropped sharply the week following those tariff announcements but has since recovered. It is now nearly back around the April 2 level. The Hong Kong benchmark Hang Seng .HSI is down 0.3 per cent since April 2. The yuan = has benefited from the capital flight from US markets and dollar assets, and is up 0.4 per cent since early April. Leading gains on Monday, the CSI Defense Index surged 5.5 per cent and the info tech sub-sector index jumped 1.2 per cent. In Hong Kong, the Hang Seng Tech Index advanced 1.8 per cent and Hang Seng Automobile Index gained 2.1 per cent. — Reuters
