U.S., China Trade Worries Ease, Global Stocks Gain

On Tuesday following Chinese President Xi Jinping’s remarks that he would cut the tariffs of U.S. imports, global equities markets made solid gains.

The Dow Jones Industrial Average on the NYSE gained over 500 points on Tuesday.

The S&P 500 in the U.S. rose 0.93 percent.

MSCI World Index gained 0.25 percent.

European Markets

The DAX in Germany gained 1 percent.

The CAC 40 in France inched up 0.57 percent.

The FTSE100 in the U.K. gained 0.41 percent, with the biggest gainers being mining companies, Anglo American and Glencore.

All Can Agree That This Is a Very Dangerous Game

Markets have been gripped in fear of a trade war after U.S. President Trump imposed tariffs on a number of Chinese imports. In a tit for tat retaliatory response China increased tariffs on a number of imports from the U.S.

Fears of a full blown all out trade war prompted global stock markets to plunge with concerns over global growth.

The Reaction by Global Markets

Tuesday’s speech by President Xi, who was speaking at the Boao Forum in Hainan province where he vowed to lower tariffs on automobiles, as well as strengthen protection of intellectual property rights was met with a positive reaction in global financial markets.

Asian stock markets rose with the Nikkei gaining 0.6 percent. The ASX200 in Sydney gained 0.8 percent with a gain of 0.77 percent in Hong Kong.

Positive Reaction

Head of equity strategy at Saxo Bank in Copenhagen, Peter Garnry said that markets are latching on to the slightest hint, even though there is still uncertainty. If there is a slightest hint that the outcome is not a worst case scenario there is a positive reaction. Garnry is of the opinion that there will be ongoing trade tensions in the coming months till the end of the year.

The Japanese yen which is traditionally a safe haven for investors in market volatility fell against the dollar and euro.

The dollar gained 0.2 percent at 106.94.

The Australian dollar gained against the dollar and was at a three week high against the yen.

Will It Be Enough to Defuse Tensions?

The question is will the pledges made by Chinese President Xi be enough to defuse tensions? He made similar pledges to President Trump when he visited China in November last year.

While in Russia, Markets Took a Downturn

The sanctions that were imposed on Russia by the U.S. targeting aluminium particularly, saw a sharp drop in the financial markets.

Shares in the Russian aluminium giant, Rusal slumped 50 percent on Monday and declined a further 7.5 percent in Hong Kong on Tuesday.

Rouble Plunges

Since last Friday the rouble has been on a decline and up until Tuesday fell around a total of 10 percent against the dollar.

Oil markets buoyed by the resolutions between China and the U.S. saw a 1 percent rise in the oil markets with Brent crude futures gaining to $69.59 a 1.38 percent increase.

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