Markets Surge on U.S.-China Trade Truce

Overview: Global Markets Rally on Tariff Relief

Global equity markets surged on Monday, led by a dramatic rebound in U.S. stocks, after the United States and China reached a temporary agreement to drastically reduce tariffs. The breakthrough in trade talks over the weekend eased investor fears of a prolonged trade war and potential recession, leading to a risk-on sentiment across major regions.

U.S. Markets: Sharp Gains on Tariff Reversal

Wall Street posted strong gains as optimism surged following the U.S.-China agreement. The Dow Jones Industrial Average $DJIA(.DJI)$   jumped 1,160.72 points (+2.8%) to close at 42,410.10, while the S&P 500 $S&P 500(.SPX)$  rose 184.28 points (+3.3%) to 5,844.19. The Nasdaq $NASDAQ(.IXIC)$   led the rally with a gain of 779 points (+4.4%) to 18,708.

The rally was fueled by news that the U.S. will reduce its composite tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on U.S. imports from 125% to 10%. These reductions affect key sectors such as renewable energy, consumer electronics, and strategic industries like semiconductors and biopharma, the latter granted a 90-day tariff reprieve.

Europe: Relief Rally Amid Trade De-escalation

European markets joined the global upswing as investor sentiment brightened. Germany’s DAX rose 0.2%, France’s CAC 40 gained 1.3%, and the UK’s FTSE 100 climbed 0.6%. The easing of U.S.-China tensions reduced geopolitical uncertainty, supporting risk appetite across the continent.

Asia: Broad-Based Gains on Trade Optimism

Asian equities reacted positively to the trade truce. Japan’s Nikkei 225 edged up 0.3%, while Hong Kong’s Hang Seng Index $HSI(HSI)$  surged 2.9%. The Shanghai Composite Index gained 0.8%. The mutual 115 percentage-point reduction in tariffs and the 90-day implementation pause on strategic sectors restored confidence in regional growth and export prospects.

Outlook and Insights: Momentum May Continue, But Eyes on Follow-through

The temporary tariff rollback offers markets breathing room and has sparked a powerful short-term rally. However, sustainability hinges on further policy clarity and whether the 90-day grace period leads to a more permanent resolution. Investors should watch for signals of follow-through commitments, particularly in sensitive sectors like semiconductors and pharmaceuticals.

Conclusion: Trade Truce Ignites Global Rally

Markets responded overwhelmingly positively to the U.S.-China tariff de-escalation, marking one of the strongest daily rallies in months. While the current momentum may carry forward in the short term, the durability of the rally will depend on whether both sides can solidify this temporary deal into lasting economic cooperation.