European stocks have followed their global counterparts higher after China and the US agreed to work together on the smooth implementation of their trade deal.
With London trading closed for VE Day, the pan-continent Stoxx 600 rose 0.7 per cent. Germany’s Dax was 0.9 per cent higher and France’s CAC was up 0.8 per cent.
US stocks climbed roughly one per cent yesterday after China said its vice premier Liu He had talked by phone to US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin.
Asian stocks finished higher overnight, too. Japan’s Nikkei 225 index jumped 2.6 per cent and Hong Kong’s Hang Seng rose one per cent. China’s CSI 300 gained one per cent.
The “phase one” US-China trade deal was struck this year before coronavirus spread rapidly around the world. China agreed to ramp up purchases of US agricultural products in return for the lifting of tariffs.
However, coronavirus has thrown the deal into doubt. Not only has it deeply damaged global trade and China’s ability to purchase US goods. It has also increased tensions between the two countries, with the Trump administration frequently blaming China for the severity of the pandemic.
Investors were spooked last week when US President Donald Trump raised the possibility of more tariffs against China.
Yet they were cheered yesterday and today by news of some progress over the deal. Liu and Lighthizer and Mnuchin agreed they would work together on achieving the goals of the trade deal this year.
Under the deal, China pledged to buy $200bn (£160bn) more US goods over two years. But purchases are currently a long way off. Imports of US goods fell six per cent in the first four months of this year.
Nonetheless, the office of the US trade representative said both sides “agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner”.