Markets bounce back as Trump pledges to do a deal with China

STOCK markets outside America rebounded yesterday after Donald Trump said a deal between the US and China "will happen".

- Giles Sheldrick

Nations had held their breath as Beijing vowed to "fight to the end" in response to the US president's pledge to impose eye-watering trade tariffs.

Mr Trump was set to slap an extra 50% levy on top of China's existing 54% tariff on imports, unless Beijing withdraws the tit-for-tat 34% it had imposed on US goods.

It could have brought taxes on Chinese goods sent to the US to 104%, making products prohibitively expensive and sending companies to the wall.

But the possibility of a deal between the world's two biggest economies saw markets that had been sent into meltdown rally.

The FTSE 100 closed 3% up last night and Europe's indexes also made gains.

But all three main Wall Street indexes fell sharply in the final hours of trading. The S&P 500 dropped 1.6%, wiping out an early gain of 4.1%; the Dow Jones Industrial Average fell 320 points after giving up an earlier surge of 1,460, while the Nasdaq composite lost 2.1%.

Mr Trump said on his Truth Social platform: "China also wants to make a deal, badly, but they don't know how to get it started. We are waiting for their call. It will happen."

Mr Trump's hand was also strengthened after China's yuan fell to an all-time low against the US dollar.