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Shares Surge As Trump Signals Hope Of China Trade War Truce

China-US Trade War May See Truce Soon US and Asian stock markets have surged on growing hopes negotiations to end the US/China trade war will result in a truce....

China-US Trade War May See Truce Soon

US and Asian stock markets have surged on growing hopes negotiations to end the US/China trade war will result in a truce. Values rose in New York on Tuesday – especially in technology and banking stocks – when US President Donald Trump confirmed he would be willing to relax the 2 March deadline for a deal if one is close.

A new round of US tariffs, on $200 billion of imports from China, is due to kick in on March 1 without an agreement. Speaking about the deadline as further talks prepared to get underway, Trump told reporters he might let it “slide for a little while”.

Earlier, the White House had called March 2 a “hard deadline”. Seven months of tit-for-tat tariffs have seen the countries place additional costs on goods worth over $400 billion in total to date, while the US president has threatened to target all $500 billion of Chinese imports.

The main stumbling block has been Washington’s demand that Beijing scales back plans for state-led champions in technology including robotics – seen by the US as threatening its dominance and the country’s intellectual property. Economists have blamed the row between the world’s two largest economies for driving the slowdown in the world economy.

It has been a major factor behind a collapse in values on world stock markets in the final quarter of 2018. There has been a tentative recovery so far in 2019 though Brexit uncertainty and the recent partial US government shutdown have also helped put a lid on sentiment.

Traders said political progress in Washington on the shutdown issue was another positive for investors on Tuesday after Trump signaled further disruption was unlikely because of a tentative deal with Democrats over funding for his controversial border wall plan.

The S&P 500 closed 1.3% up while the Dow Jones Industrial Average was 1.5% higher. The mood extended to Asia on Wednesday as China’s Shanghai Composite hit levels not seen since November while the Nikkei in Japan was 1.5% up.

European markets were more cautious, with the FTSE 100 up 0.4% in early deals. Jasper Lawler, head of research at London Capital Group, said: “Whilst there have been positive reports regarding the trade talks investors were getting nervous of the nearing deadline and no solid evidence of progress.”

He continues, “Negative sentiment is unwinding, and investors are showing that they are prepared to put risk back on the table. For sentiment to remain positive we will need to see evidence of a deal in March. However, for now, markets are willing to let this pass.”

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