A wave of relief. The economic truce between China and the United States has been extended, leading to a rally in stock markets on Tuesday. Is this a genuine trend or just a temporary reprieve?
Asian and European stock markets up this morning
Asian markets closed higher overnight following the extension of the truce between the United States and China. Japan’s flagship stock index, the Nikkei, ended the day up 2.15%, driven in part by significant gains in the tech sector.
In China, the Shanghai Stock Exchange closed up 0.50%, while the Hong Kong Stock Exchange rose 0.25%. However, South Korea’s main stock index, the Kospi, closed down 0.53%.
Europe also opened in positive territory. In France, the CAC 40 was up 0.53% around 10 a.m. The London Stock Exchange, meanwhile, rose 0.28%. As for the Zurich Stock Exchange, it remained flat with a gain of 0.07%. The STOXX Europe 600 index was up 0.31% at the same time, indicating a broad-based recovery.
Another extension to reach an agreement between the United States and China
The end of the truce between the United States and China was set for this Tuesday, but it has been extended by 90 days. This is a positive sign: negotiations are indeed underway between the two economic powers, which have been engaged in an intense trade war in recent months. The extension of the truce was expected, as the tone between Washington and Beijing has softened in recent weeks.
On the U.S. markets, the reaction will likely remain cautious. Investors are awaiting the release of inflation data today. Lower-than-expected inflation could extend the global uptrend, while an upward surprise could dampen momentum.
While the truce is therefore welcomed with relief, the issues between China and the United States remain unresolved. Supply chains, technological issues, and the defense of each side’s fiat currencies are giving rise to particularly crucial discussions between the two global powers.
