The Dow, Nasdaq and S&P all opened higher, while European and Asian shares advanced following agreement by the leaders of the two countries to hold off on new tariffs and intensify trade talks. Stocks surged after President Donald Trump said that China will “reduce and remove” tariffs on imported American-made cars. Ten-year Treasury yields rose back above 3 percent while the euro pared some gains.
Oil was jolted higher by efforts across the globe to support prices as Saudi Arabia and Russia extended their pact to manage the market and Canada’s largest producing province ordered unprecedented supply cuts. Optimism was dented slightly after Qatar said it was leaving OPEC, just as the group prepares to meet this week.
The truce between Trump and President Xi Jinping at the Group of 20 summit in Argentina has gone some way in calming investor fears over the state of global growth after a tumultuous period for risk assets. The U.S. had been scheduled to push ahead on Jan. 1 with increased tariffs on $200 billion worth of Chinese goods. Going forward, investors will assess the prospects for an end-of-year equity rally, while oil traders will continue to focus on any OPEC-related headlines to gauge the likely scale of production cuts.
“The meeting that we saw over the weekend was very much positive in terms of market sentiment,” said Kerry Craig, a Melbourne-based global market strategist at JPMorgan Asset Management of the Trump-Xi talks. “So there’s a small ray of sunshine here but it’s too early to be very positive on the outcome.”
Elsewhere, the pound erased a gain as the threat of a vote to bring down British Prime Minister Theresa May’s government looms should Parliament reject her Brexit deal. That raises the stakes even further as lawmakers begin debating her plan this week. China’s yuan climbed with emerging market assets. Gold and copper rallied, as did most other commodities.
