The US and China have agreed to substantially wind back tariffs for 90 days which has lifted investor sentiment and driven equities higher.
ANZ says the move “materially de-escalated” trade tensions between the two countries.
US tariffs on China will be cut to 30%, from 145% previously, for a period of 90 days while negotiations continue. Meanwhile, China has cut its proposed 125% tariffs on the US to 10%.
ANZ Economist Madeline Dunk says the news has been welcomed by markets as a welcome sign of de-escalation amid concerns that rising tariffs and trade tensions threaten to push the US economy towards recession.
“A final trade arrangement could take some time, and Trump warned that tariffs could still go higher (though not to where they were) if talks failed,” Dunk notes.
“But in the short term this 90-day reprieve increases optimism that the worst-case outcome (stagflation) will be avoided.”
Talks in the coming weeks will be centred on a broader agreement, with China also agreeing to wind back its recent non-tariff measures.
“No details were provided, but the US has wanted export controls on rare earth minerals rolled back,” Dunk says.
The US-China deal lifted the S&P/ASX200 62.3 points, or 0.76%, to 8,295.8 points by 10.30am (AEST) today (13 May).
The index is up 1.77% over the past five days and is 3.71% off its 52-week high.
Seven of the 11 sectors were flashing green in early trade, led by materials on a 0.88% march higher. Energy rose 0.21%, while industrials lifted 0.13%. Utilities was down 0.21%.
Aluminium heavyweight Alcoa (ASX:AAI) climbed 7.94% to $44.19, while the gold miners retreated as safe haven buying declined on the easing trade tensions.
Perseus Mining (ASX:PRU) slid 8.71% to $3.25, Capricorn Metals (ASX:CMM) dipped 8.6% to $8.61, Ramelius Resources (ASX:RMS) retreated 7.38% to $2.51, Genesis Minerals (ASX:GMD) fell 7.3% to $3.81 and Regis Resources (ASX:RRL) tumbled 7.28% to $4.33 shortly after the opening bell.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & Stock
