LONDON,- Global shares rallied, while gold and safe-haven currencies slumped against a resurgent dollar on Monday as the U.S. and China agreed to temporarily slash harsh reciprocal tariffs and cooperate to avoid rupturing the global economy.
Following weekend talks in Geneva, both sides agreed that the U.S. would drop levies on Chinese imports from 145% to 30% during a 90-day negotiation period and China would cut duties from 125% to 10%.
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Wall Street stocks were set for significant daily gains, with the S&P 500 index (.SPX), opens new tab rising 2.9% in early trades and the tech-focused Nasdaq Composite (.IXIC), opens new tab advancing by 4%.
In a joint statement on Monday, Washington and Beijing said they recognised the importance of their bilateral trade relationship to both countries and the global economy, in language that analysts widely said had brightened the market outlook.
An index tracking the dollar against other major currencies rose further from last month’s three-year trough with an almost 1.1% gain, while Japan’s yen fell 2% to 148.2 per dollar .
The retreat from haven assets pushed Switzerland’s franc 1.6% lower on the day, in a jolt of relief for Swiss exporters and the nation’s central bank.
Spot gold prices , which hit an all-time high of $3,500 last month and often move inversely to the dollar, fell almost 3% to $3,231 an ounce.
“This announcement is not only better than we expected but also better than the market would have expected back in March,” Deutsche Bank strategists said in a note to clients about U.S. and China’s agreement to suspend tariffs.
The euro, which surged in April as investors questioned the dollar’s long-held status as the world’s reserve currency, was 1% lower at $1.1138.
‘RELIEF’
Kit Juckes, chief FX strategist at Societe Generale, said the tariff pause was a “substantial relief” for the U.S. and China.
With tariff anxiety having already caused some Chinese exporters to consider their futures, data this weekend showed the nation’s factory-gate prices had dropped by the most in six months in April.
