Chinese stocks soared to their best one-day rise in more than three years today after President Donald Trump indicated the US would postpone a tariffs hike on $200bn of Chinese imports.
The US was set to increase tariffs on a vast range of goods from 10 per cent to 25 per cent this Friday, but is now set to delay this after Trump welcomed “substantial progress” in trade talks between the nations.
Chinese markets leapt in response, with the CSI 300 index comprising Shanghai and Shenzhen-listed companies jumping 5.95 per cent in trading, its best one-day rise since the summer of 2015.
That sent the index up to 3,520 points – its highest level since July 2018, when it stood at 3,521.
The Shanghai Composite also closed up 5.6 per cent at 2,961 points, while Hong Kong’s Hang Seng index was up 0.5 per cent less than an hour before it was due to close.
“A very good weekend for US & China!” Trump tweeted, saying he would now set up a summit with Chinese counterpart Xi Jinping at his Mar-a-Lago home to conclude an agreement, as long as talks progress sufficiently.
“The trade extension has not come as a complete surprise to traders. Last week, Trump was dropping hints that the 1 March trade truce deadline was a fluid date; not one set in stone,” said Jasper Lawler, London Capital Group’s head of research.
He warned that the news will not buoy worldwide markets before an actual deal is struck.
“Whilst China, which has the most to gain from a deal, is trading significantly higher on Monday, elsewhere we expect the market reaction to be limited. Let’s not forget that this is not a deal,” he pointed out.
“Progress has been made but reports also suggest that there is still some ground to be covered before the Summit between President Trump and China’s Xi Jinping. Traders are acutely aware that talks will be harder in this final stage.