U.S. stock market futures surged after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a truce on the trade war that has weighed heavily on global equity markets for most of 2018.
Futures on the Dow Jones Industrial Average jumped 463 points as of 6:30 p.m. New York time. S&P 500 futures added 1.7 percent, while futures on the Nasdaq-100, home of many technology companies which sell to China, jumped nearly 2 percent.
Futures on oil and copper jumped on hopes a possible new China-U.S. trade agreement would boost global economic growth.
The two leaders, who met for dinner on Saturday at the G-20 summit in Argentina, agreed to hold off on additional tariffs on each other’s goods at the start of the new year to allow for talks to continue. The U.S. agreed to leave tariffs on more than $ 200 billion worth of Chinese products at 10 percent. If after 90 days the two countries are unable to reach an agreement, that rate will be raised to 25 percent, according to the White House. Trade negotiations will address forced technology transfer and intellectual property.
“The explicit delay in tariffs is on the positive end of expectations,” said Helen Qiao, China and Asia economist with Bank of America Lynch, in a note to clients. “In contrast to the fear — especially in Asia —that the hawks in US administration would make impossible demands, evidence of President Trump working towards a trade deal with China has emerged.”