TEHRAN, Young Journalists Club (YJC) - Asian shares rallied on Monday after U.S. and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets and battered oil prices.
Trade-exposed currencies led the early gains, with the Australian dollar notching a four-month peak, while the dollar dropped to one-month lows against the yuan CNH=.
E-Mini futures for the S&P 500 ESc1 climbed as much as 1.9 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS jumped 1.8 percent.
“Markets are opening with a knee-jerk boost to risk appetite but time will tell how enduring the optimism proves to be,” said ANZ economist Jo Masters. “There are already very different official takes on what was achieved at the meeting.”
“But for now, both sides can claim a win,” she added. “Perhaps not insignificantly, it provides a window to export the soybean crop from key Republican states, at least.”
China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching a deal within 90 days.
The White House said on Saturday that President Donald Trump told Chinese President Xi Jinping during high-stakes talks in Argentina that he would not boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1 as previously announced.
“Deeply contentious thornier structural issues such as forced technology transfer remain unresolved,” cautioned Westpac FX analyst Robert Rennie.
“This U.S.-China agreement is thus better characterized as a ‘mini-breakthrough’ that puts a momentary pause on trade tensions rather than a comprehensive policy deal.”
Indeed, many market players doubt the two countries can bridge their differences that cover a range of issues within three months.
“Technology is becoming the main battle ground. It’s not just a trade war any more. It’s more like a technology war, in which we just found a temporary lull,” said Hiroshi Watanabe, economist at Sony Financial.
And on the whole, there is still uncertainty over the outlook for corporate earnings amid signs of slowing growth.