Global equity markets rallied and the Japanese yen fell yesterday as Chinese President Xi Jinping’s promise to cut import tariffs eased investor concerns about an escalating US-China trade row.
Speaking at the Boao Forum for Asia in China’s Hainan province, Mr Xi vowed to open China’s economy further, protect intellectual property of foreign firms and he criticised a “Cold War mentality” as obsolete, in his first public comments since the trade dispute with US President Donald Trump’s administration erupted.
Mr Xi’s comments prompted a largely positive reaction in financial markets, which have been rattled on fears that tit-for-tat US-China tariffs will escalate into a full-scale trade war that would threaten global growth.
“The expectation was this could have gone one of two ways: he could have been aggressive about US tariffs or been conciliatory, and it feels like he’s more conciliatory,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
The Dow Jones Industrial Average rose 481.37 points, or 2.01 per cent, to 24,460.47, the S&P 500 gained 42.97 points, or 1.64 per cent, to 2,656.13 and the Nasdaq Composite added 116.44 points, or 1.68 per cent, to 7,066.79.
The pan-European FTSEurofirst 300 index rose 0.84 per cent and MSCI’s gauge of stocks across the globe gained 1.29 per cent.
Emerging market stocks rose 0.93 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.17 per cent higher, while Japan’s Nikkei rose 0.54 per cent.
Oil markets rose sharply on hopes that the trade dispute may be resolved without greater damage to the global economy.
US crude rose 2.82 per cent to $65.21 per barrel and Brent was last at $70.68, up 2.96 per cent on the day.
Meanwhile, the Japanese yen weakened 0.53 per cent versus the greenback at 107.35 per dollar, while Sterling was last trading at $1.4158, up 0.21 per cent on the day.
The dollar index fell 0.06 per cent, with the euro up 0.07 per cent to $1.2328. Benchmark 10-year notes last fell 4/32 in price to yield 2.7991 percent, from 2.786 percent late on Monday.
The 30-year bond last fell 4/32 in price to yield 3.0238 per cent, from 3.017 per cent late on Monday.