Stocks, dollar surge as US and China agree 90-day tariff relief

By Naomi Rovnick

May 12, 20257:17 PM GMT+8Updated an hour ago

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Stocks, dollar surge as US and China agree 90-day tariff relief

By Naomi Rovnick

May 12, 20257:17 PM GMT+8Updated an hour ago

Summary

Companies

U.S. and China reach deal to slash reciprocal tariffs

Wall Street stock futures leap

Dollar rallies against euro, yen

Gold drops, government bonds under pressure

LONDON, May 12 (Reuters) - Wall Street stock futures surged, the dollar rallied and gold prices slumped on Monday as the U.S. and China agreed to temporarily slash the harsh tariffs imposed on each other and work together to limit economically damaging trade spats.

Following weekend talks in Geneva, both sides agreed that the U.S. would drop levies on Chinese imports from 145% to 30% during a 90-day negotiation period, while China would cut reciprocal duties from 125% to 10%.

Futures tracking Wall Street's S&P 500 index were 2.7% higher and contracts following the Nasdaq 100 index jumped 3.8% , setting the tech-heavy U.S. stock index up for its best trading day in more than a month.

An index tracking the dollar against other major currencies rose further from last month's three-year trough, with a 0.9% gain, while equity bourses from Hong Kong to Frankfurt rose in a global relief rally.

In a joint statement, Washington and Beijing also said they recognised the importance of their bilateral trade relationship to both countries and the global economy, in language that analysts widely said had brightened the market outlook.

"This announcement is not only better than we expected but also better than the market would have expected back in March," Deutsche Bank strategists said in a note to clients.

Kit Juckes, chief FX strategist at Societe Generale, said the tariff pause was a "substantial relief" for the U.S. and China.

Data over the weekend showed Chinese factory-gate prices posted the steepest drop in six months in April as trade fears hit business and consumer sentiment globally.

Trump's erratic trade policies had also sparked fears for U.S. corporate earnings, with investors having entered this week nervous about an impending update from retail giant Walmart (WMT.N), opens new tab after a slew of U.S. multi-nationals pulled their forecasts.

Brent crude oil futures were almost 3% higher at $65.69 a barrel and U.S. West Texas Intermediate (WTI) crude futures gained 3% to $62.90.

Germany's DAX share index (.GDAXI), opens new tab rose 1.5% to a record high in early European trading and Italy's FTSE MIB hit its highest level since 2007. Europe's regional STOXX 600 (.STOXX), opens new tab was last trading 1% higher and Hong Kong's Hang Seng Index ended the day with an almost 3% gain.