Global stocks turn higher as China says tariff war may ease

Daniel Fowler
November 7, 2019

"Until we get more clarity on the venue and USA position on China's tariff request, look for Emerging Asian currencies and the Australian dollar to give back some of the gains chalked in October", they said.

In a step towards a trade deal, Beijing on November 7 announced that China and the US agreed to remove additional tariffs on their goods, local media reported. A worsening trade war would sour that.

The U.S. and China have agreed to remove additional tariffs in phases once the leaders of the two countries sign a trade agreement, the Chinese Ministry of Commerce said on Thursday.

The Chinese Commerce Ministry said the two sides would decide how much tariffs would be rolled back in first phase.

The governments of the two biggest global economies have raised tariffs in the fight over China's trade surplus and technology ambitions.

Stocks rallied, with Hong Kong's Hang Seng Index climbing 0.6%. That sent US shares decisively lower overnight, though the retreat was short-lived. "Investors are still cautious".

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Earlier, a Reuters report that the United States and China may delay signing of a "Phase 1" trade deal until December.

As for the size of reductions, Gao said that would depend on the agreement. Locations in Asia and Europe are now being considered instead, the person said, asking not to be identified because the discussions aren't public.

One important condition for a limited trade agreement, Feng insisted, was that the US and China must remove the same amount of charges at the same time.

Trump administration officials in recent days have expressed optimism that phase one of a comprehensive trade deal might come together this month, helping boost equity markets to records this week.

The proportion of tariffs cancelled for both sides to reach a "phase one" deal must be the same, but the number to be cancelled can be negotiated, he added, without elaborating. American farmers have been hit particularly hard by China's refusal to import US agricultural goods, and the Trump administration has provided roughly $30 billion in assistance to help offset the damage.

Still, Iris Pang, an economist at ING Bank, said: "I am skeptical on how fast the progress will be".

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