SINGAPORE: Chinese stocks rallied and the yuan strengthened on Monday after the United States and China said they have agreed to a deal to slash reciprocal tariffs in a substantial de-escalation of a potentially damaging trade war.
US Treasury Secretary Scott Bessent, speaking after talks with Chinese officials in Geneva, told reporters the two sides had reached the deal that was outlined in a joint statement and that reciprocal rates would drop by 115 percentage points.
The move gave investors some confidence that a full-scale trade war may have been averted. Hong Kong’s benchmark Hang Seng Index extended the gains and closed up 3% after the news and the Hang Seng Tech Index rallied more than 5%, both representing the biggest single-day jumps since early March.
The yuan strengthened to as much as 7.2001 against the dollar to reach a six-month high, while its offshore counterpart rose more than 0.5%.
China’s blue-chip CSI 300 Index closed up 1.2% and the Shanghai Composite Index added 0.8% before the details came out.
“The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile,” said William Xin, chairman of hedge fund Spring Mountain Pu Jiang Investment Management in Shanghai.
“Now there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.”
This weekend’s Geneva meetings were the first face-to-face interactions between senior US and Chinese economic officials since US President Donald Trump returned to power and launched a global tariff blitz.
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