US stocks jump on ‘meaningful progress’ in China-US trade talks

Investors applaud China’s pledge to buy more American goods and US’s delay of tariffs on up to US$150 billion in goods from China

PUBLISHED : Tuesday, 22 May, 2018, 2:21am
UPDATED : Tuesday, 22 May, 2018, 4:31am

US stocks closed sharply higher on Monday after the US and China appeared to make major progress in trade talks, with technology and industrial companies making some of the biggest gains.

The Dow Jones Industrial Average rose 298 points, or 1.2 per cent, to close above 25,000 for the first time since March. The S&P 500 and Nasdaq gained 0.7 per cent and 0.5 per cent, respectively.

The Chinese government said it would buy more American goods and services and US Treasury Secretary Steven Mnuchin said the US postponed tariffs on up to US$150 billion in goods from China after the two sides made “meaningful progress” toward a new trade agreement.

The US and China concluded two days of trade negotiations with an agreement not to impose tariffs on each other. Beijing had said it would buy more farm goods, energy and other products and services from US companies.

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The two sides, however, gave no indication of how much progress they had made towards ending their dispute entirely.

China said it could not guarantee that trade tensions would be permanently avoided and Mnuchin said US President Donald Trump could reintroduce the tariffs he has proposed if the countries fail to reach an agreement.

Evercore ISI analyst Terry Haines wrote in a note to clients that the most important thing is that the two sides are to keep talking. As long as they do that, they are unlikely to introduce any tariffs.

“Taken together, this month’s Washington and Beijing meetings are best understood as a promising foundation for continued discussions and negotiations,” Haines said.

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Micron Technology jumped 3.9 per cent on Monday after the chip maker raised its profit and revenue forecasts.

General Electric rose 1.9 per cent after reaching a deal to combine its train engine business with Westinghouse Air Brake Technologies.