Reduction in tariffs a 'good starting point'

A breakthrough in US-China trade talks set off a relief rally in stocks on Monday and propelled the dollar higher, but investors fear further negotiations could prove a long slog, as risks of a global economic slowdown persist.

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After two days of talks with Chinese officials in Geneva, US Treasury Secretary Scott Bessent said the two sides agreed to a 90-day pause on measures, and tariffs would fall by over IOO percentage points.

That leaves US tariffs on Chinese goods at 30% from May 14 to August 12 and Chinese duties on US imports at 10%. The outcome exceeded the hopes of many investors ahead of the talks.

The dollar jumped over 18 against a basket of major currencies, as the yen and Swiss franc fell along with other safe-haven assets like gold and government bonds.

"This is a relief rally that the worst case scenario in tariffs, being tariffs over 100%, is not likely to materialise," said John Praveen, managing director at Paleo Leon in Princeton, New Jersey. "We may not get zero tariffs but the worst case is unlikely. We've pulled back from the brink."

The cheer was tempered by caution, given a more permanent trade deal needs to be struck, while higher tariffs overall could still weigh on the global economy, according to a Reuters report.