News that the United States and China were lowering tariffs after weekend talks sent stock markets soaring around the world.
“This is a huge positive in the right direction for the markets, and more progress has come out of these Swiss talks than even the bulls were hoping for heading into Friday night,” Wedbush analysts said, according to The Wall Street Journal.
As of 8:40 a.m. ET, Dow Jones futures were up more than 1,100 points, according to CNN. The Standard & Poors and Nasdaq exchanges were up 3 percent and 4 percent, respectively.
According to the deal, the United States and China will each lower the current tariff rate on each other’s imports by 115 percent. That sets the tariff on Chinese goods coming into the U.S. at 30 percent and the rate for American goods entering China at 10 percent, according to ABC.
The agreement, which will be in place for 90 days, also commits the two sides to begin talks on a longer-term trade agreement.
Europe’s Stoxx 600 index rose 1 percent, Germany’s DAX hit a one-year high, and shares in Hong Kong leaped 3 percent, according to CNBC.
“The magnitude of this tariff reduction is larger than expected,” said Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management.
“Overall, we expect the market to get back on to a risk-on sentiment in the near term,” he said.
Jordan Rochester, head of currency strategy EMEA and executive director at Mizuho Bank in London, called the deal “much better news than expected” in a Monday morning note.
He said that “the ‘Sell America’ narrative [gets] squeezed.”
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Last week, as President Donald Trump signed a trade deal framework with Great Britain, he predicted that market doldrums would soon be a thing of the past, according to Fortune.
“You better go out and buy stock now,” he said then, adding that America’s economy “will be like a rocket ship that goes straight up.”
Some analysts noted that a corner was turned, but there was work to reach a final destination.
“We believe peak uncertainty over trade has passed, but market volatility is likely to stay,” UBS head of fixed income Kurt Reiman wrote in a Monday note, according to CNBC.
“Our base case remains that the effective U.S. tariff rate (ex-China) will moderate toward 15 percent by year-end.”
“While the lower tariffs are technically only in place for 90 days, and 30 percent is still quite large on an absolute basis, the news is clearly an upside positive surprise,” equities analyst Adam Crisafulli, head of Vital Knowledge, wrote in research note, according to CBS.
“This is a substantial de-escalation,” said Mark Williams, chief Asia economist with Capital Economics.
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