Instant View: US-China agree to cut tariffs, 90-day pause

Reuters

Mon, May 12, 2025, 12:33 AM 5 min read

LONDON/SHANGHAI (Reuters) - Stocks and the dollar surged connected Monday aft the United States and China said they had agreed connected a 90-day intermission connected tariffs and reciprocal duties would driblet sharply, giving investors immoderate assurance that a full-scale commercialized warfare whitethorn person been averted.

U.S. Treasury Secretary Scott Bessent, speaking aft talks with Chinese officials successful Geneva, told reporters the 2 sides had reached the woody that was outlined successful a associated connection and that reciprocal rates would driblet by 115 percent points.

This weekend's meetings were the archetypal face-to-face interactions betwixt U.S. and Chinese officials since U.S. President Donald Trump returned to powerfulness and launched a planetary tariff blitz, imposing peculiarly hefty duties connected China.

MARKET REACTION:

STOCKS: Futures connected the S&P 500 and Nasdaq jumped to commercialized up 2.8% and 3.5%, respectively, from gains of 1.5-2% previously, portion successful Europe, the STOXX 600 roseate 0.7% successful aboriginal trading.

FOREX: The dollar extended gains, with the euro down 1.2% astatine $1.1164, having traded down 0.2% connected the time earlier, portion the yen weakened, leaving the U.S. currency up 1.6% astatine 147.715, from a 0.5% summation earlier.

BONDS: Benchmark 10-year U.S. Treasury yields roseate 7 ground points connected the time to 4.44%, having traded up 5 bps earlier the associated statement.

COMMENTS:

JAN VON GERICH, CHIEF MARKET ANALYST, NORDEA, HELSINKI:

"Markets person taken it astatine look value, I personally americium a spot sceptical, if you privation to extremity up with debased tariffs past wherefore bash it similar this? It’s inactive bouncy, and uncertainty is elevated.

"I’m inactive disquieted that determination volition beryllium a past word, that present they’ve travel to an archetypal decision the details won’t fulfill some sides, and determination volition beryllium thing other but, of course, clip volition tell. I would not instrumentality everything we perceive astatine the infinitesimal astatine look value, that’s what we saw connected ‘Liberation Day’ (April 2 tariff announcement), and now, and it inactive bounces some ways."

JANE FOLEY, HEAD OF FX STRATEGY, RABOBANK, LONDON:

"The marketplace reacted already overnight successful anticipation of this, and we’ve got a spot much details now, and it's continuing the code it acceptable overnight, wherever it’s buying backmost the dollar. We person this script wherever the dollar is present being treated arsenic a risky plus and is making gains.

"We’ve had reassurance from the U.S. that negotiations volition proceed and that the code of the negotiations person been affirmative and US and China don’t privation to decouple, truthful determination is simply a batch much optimism that the tariffs won’t person the devastating interaction that possibly they could person done, and determination is simply a corporate suspiration of alleviation successful markets.