A man looks at a screen showing Chinese stock market movements as he uses his mobile phone in Beijing. File photo. Photo: Wang Zhao / AFP
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.
Speaking after talks with Chinese officials in Geneva over the weekend, US Treasury Secretary Scott Bessent told reporters the two sides had reached a deal for a 90-day pause on measures and that reciprocal tariffs would come down by 115 percent.
Hong Kong's benchmark Hang Seng Index extended the gains to over 3 percent after the news, while the Hang Seng Tech Index rallied more than 5 percent.
The yuan strengthened to 7.2001 against the dollar to reach a six-month high, while its offshore counterpart rose more than 0.5 percent.
China's blue-chip CSI 300 Index closed up 1.2 percent and the Shanghai Composite Index added 0.8 percent 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."
Ahead of the talks, US President Donald Trump had signalled punitive tariffs of 145 percent on China would likely come down and even floated an alternate tariff figure of 80 percent that he said "seems right".
China is at the epicentre of Trump's global trade war that has roiled financial markets, upended supply chains and fuelled risks of a sharp worldwide economic downturn.
Tensions between the two sides have steadily ratcheted up since Trump's inauguration in January, intensifying after his 2 April "Liberation Day" announcement of sweeping tariffs and Beijing retaliating with equally hefty tariffs on US goods.
China's blue-chip CSI300 Index dropped sharply the week following those tariff announcements but has since recovered. It is now nearly back around the 2 April level.
The Hong Kong benchmark Hang Seng is down 0.3 percent since 2 April.
The yuan has benefited from the capital flight from US markets and dollar assets, and is up 0.4 percent since early April.
- Reuters
