European and Irish shares jump as China and US cut tariffs

European and Irish shares jumped in early trading on Monday after the US and China unveiled an agreement to lower so-called reciprocal tariffs for 90 days.

The deal, announced in Geneva after discussions over the weekend, will see both sides lower punishing duties on each other’s goods for 90 days and is seen as the first step towards a more permanent agreement to avoid a further escalation in the trade war.

Global shares jumped following the announcement, with US equity futures surging.

In Europe, the pan-European Stoxx 600 index was ahead by 1 per cent in late afternoon trading, while the blue-chip Stoxx 50 was by 1.5 per cent.

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The Iseq index had also moved more than 1.8 per cent higher by late afternoon. Shares in AIB and Bank of Ireland were up around 4 per cent, while heavy-hitters on the Euronext Dublin like Ryanair holding steady and Glanbia up 2.6 per cent.

The US dollar climbed against safe-haven currencies, rising 1.7 per cent against the Japanese yen and 1.5 per cent against the Swiss franc.

“The dollar was lagging other markets in the recovery from the April lows. Now the conditions are falling into place for a deeper adjustment and a bigger recovery of the dollar to catch up with equities and bond yields,” said Kenneth Broux, senior foreign exchange and rates strategist at Societe Generale in London.

China’s yuan, meanwhile, rose to its highest level since last November.

Markets had already begun to price in the agreement after positive comments over the weekend from the US and Chinese delegations in Geneva.

The agreement reached over the weekend will see the US lower tariffs on Chinese goods to 30 per cent from 145 per cent with China cutting duties on US imports to 10 per cent from 125 per cent.

“We want more balanced trade, and I think both sides are committed to achieving that,” Scott Bessent, US Treasury secretary, said at a briefing in Geneva on Monday. “Neither side wants a decoupling.”

“We believe that continued consultations will help resolve issues of concern to both sides in the economic and trade fields,” China’s ministry of commerce said in the statement released simultaneously with the US delegation’s remarks.

Uncertainty remains, however, after the Trump administration’s latest reversal, which critics of the Republican Party leader’s tactics have characterised as chaotic flip-flopping.

Mr Trump faced growing pressure from US business leaders in recent weeks to soften the administration’s stance on Chinese tariffs as early signs of economic damage from the stand-off became apparent.

“The overall scenario is not as bad as it could have been, but we still have a fair amount of uncertainty about where these tariffs will settle, their impact on world growth and central bank policy,” said Jane Foley head of foreign exchange strategy at Rabobank in London. – Additional reporting: Reuters