This July 16, 2013, file photo, shows a Wall Street street sign outside the New York Stock Exchange. AP FILE
NEW YORK, United States – Global equity markets soared, then settled for cruising altitude on Monday after China and the United States clinched a trade war truce, while oil prices surged on production cut expectations.
Wall Street opened with the Dow Jones Industrial Average surging 1.6 percent higher, joining a rally kicked off in Asia and maintained in Europe — though most major markets later pulled back somewhat.
Frankfurt, London and Paris, which had taken their cue from strong rises in Hong Kong and Shanghai, saw early gains of around two percent slide to 1.8, 1.2 and 1.0 respectively by the close.
The Dow finished at 25,826.43, 1.1 percent higher, a solid gain, but well below session peaks.
In a much-anticipated weekend meeting between Donald Trump and Xi Jinping, the heads of the world’s two biggest economies hammered out a deal that will see them hold off on their tit-for-tat tariffs row, which has roiled global equities for months.
Treasury Secretary Steven Mnuchin said the United States would need to need to see “something concrete” from China on trade in the next 90 days to build a real agreement. Key issues include such thorny matters as intellectual property protection.
Analysts warned about getting too optimistic.
“There is a lot between where we are now and getting an agreement,” said Maris Ogg of Tower Bridge Advisors. “The more you look at details, the more you realize that.”
Even so, the agreement was still “a little bit better than what people expected.”
“The problem is that China needs to look strong in front of their people and the USA needs that too,” she added. “I don’t think anything can be solved in three months.”
For Capital Economics, “we doubt that the ceasefire agreed between Presidents Trump and Xi in Buenos Aires will mark a real turning point in the trade war. Particularly contentious issues like intellectual property rights and market access have yet to be addressed, and we wouldn’t be surprised if no agreement is reached in the 90-day period during which the US has pledged to suspend its previously-planned tariff increases.”
Oil rebounds
Meanwhile, oil prices, battered by concerns the trade war would hit demand for the commodity, pushed solidly higher, boosted by the US-China truce news, among other factors.
Adding to the buying support was President Vladimir Putin saying Saturday that Russia and Saudi Arabia had agreed to renew a pact on production cuts.
The commodity was further boosted as the Canadian province of Alberta announced an 8.7 percent cut in oil production due to a glut of oil stuck in storage tanks.
Ahead of the upcoming OPEC meeting on Thursday in Vienna, Bjarne Schieldrop, chief commodities analyst at SEB, the leading Nordic corporate bank, said he believed continued cooperation would help oil prices stay above $60 a barrel. /cbb