US-China truce sends markets into green

Global sharemarkets surged on Monday as investors responded positively to de-escalation of the trade war between China and the US.

The world's two largest economies have called a 90-day truce, which started on December 1, over the escalating tariffs being placed on one another's exports and market access.

Bourses across the US, Europe and UK, and Asia-Pacific region all rose, but were expected to ease back yesterday following Monday's gains.

The New Zealand dollar had since Tuesday last week gained more than US1.5c, at 5pm sitting on US0.6956 yesterday.

The New York Stock Exchange and Nasdaq will close trading on Thursday (NZ time) in honour of former president George H.W. Bush (94), who died last week.

Craigs Investment partners broker Chris Timms said the ASX 200 soared 1.8% on Monday, with all its sectors closing in positive territory.

''The major miners posted strong gains - Rio Tinto advanced 2.3%, Fortescue surged 4.3%, while BHP Billiton gained 3.7%,'' he said.

Forsyth Barr broker Suzanne Kinnaird said markets in the US, Europe, UK and Asia ''were all in the green''.

''News that the US and China called a temporary truce to their trade war over the weekend triggered relief buying of perceived riskier assets, such as equities,'' Mrs Kinnaird said.

In the US the S&P 500 and Nasdaq Composite were at their highest levels in more than three weeks during trading and ended with the S&P 500 up 1.09%, the Dow Jones Industrial Average gained 1.13% and the Nasdaq Composite rose 1.51%.

In Europe, the Stoxx 600 index rose 1%, the German DAX rallied 1.9% and the French CAC and UK's FTSE posted gains of 1% and 1.2% respectively.

The greater China markets led the charge with the Shanghai Composite and Hang Seng surging 2.6%, South Korea's Kospi gained 1.7%, while Japan's Nikkei ended the session 1% higher.

Mr Timms said while investor sentiment was buoyed by the news of the 90 day trade truce, the White House later said the existing 10% tariffs on $US200 billion ($NZ289 billion) worth of Chinese goods would be lifted to 25%, if no deal was reached during the 90 day period.

simon.hartley@odt.co.nz

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