Following the highly-anticipated meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit over the weekend, global stocks rallied this week as news of resumed trade talks spread. The United States and China have announced a temporary ceasefire in implementing retaliatory tariffs against each other, while also promising to resume trade negotiations.
The truce was understandably met with enthusiasm across the globe, with investor sentiments improving in various markets.
In Asia, China's benchmark Shanghai Composite Index surged by more than 2 percent following the news. Tokyo's Nikkei Index also surged by more than 2 percent as tensions between the two nations subsided.
European stocks experienced more of the same uptrend, with Britain's FTSE 100 and France's CAC 40 jumping by almost 1 percent. Germany's DAX had the most increase with an upward jump of more than 1.6 percent. US stock reacted positively to the news of the ceasefire with the Dow surging by 1.1 percent to 285 points.
The NASDAQ composite, which includes key US tech firms, rose by more than 1.7 percent. The S&P 500 also experienced an uptick, with the stock jumped by more than 1.2 percent.
The positive sentiments were a direct result of Trump's announcement shortly after his meeting with Xi at the sidelines of the G20 summit in Japan over the weekend. Trump mentioned that he would be holding off imposing additional tariffs on hundreds of billions worth of Chinese imports.
Trump also stated that he would be allowing US companies to continue their transactions with the Chinese tech giant Huawei, under conditions that the transactions do not present any national security concerns.
Trump appeared to have reversed his hard-line stance on Huawei, which he had previously placed on the country's trade blacklist. The move essentially barred all US firms from doing business with the Chinese firm, effectively cutting off its vital supply of components.
According to market analysts, the promise of renewed talks has bred a lot of positive sentiments amongst investors. The talks could bring two of the world's largest economies to an amicable trade deal that would benefit the entire global economy.
While both countries have expressed hesitations in finally coming up with a trade deal, the recent meeting between both leaders has at least steered things in the right direction. It has yet to be seen if the initial stock rally will be sustained as uncertainty towards a meaningful agreement does still loom over global markets.
