Asian and European markets mostly rose Monday and the dollar extended gains after the US and China said they had agreed to hold off imposing tariffs, averting a potentially damaging trade war. After high-level talks in Washington the two economic superpowers revealed a deal had been hammered out, ending months of tension that have sent financial markets into a frenzy. Treasury Secretary Steven Mnuchin told Fox News on Sunday that “right now we have agreed to put the tariffs on hold” while Xinhua reported China’s Vice Premier Liu He as saying “the two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other”. While short on detail, the announcements provided much relief to investors, who had been fearing the imposition of levies on billions of dollars of exports between the two sides. “The latest statement on the China-US trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement,” said Stephen Innes, head of Asia-Pacific trade at OANDA. “The intentional vagueness delivered by both parties’ statements suggests a great divide, but there’s a hint of a consensus, none the less, to bridge that gap. So given the possible worst-case scenario was avoided the market should view the latest trade discussions as a favourable.” Dollar rallies Hong Kong rose 0.6 percent and Shanghai was up 0.6 percent. Tokyo added 0.3 percent as the weaker yen helped Japanese exporters. Singapore added 0.8 percent and Seoul gained 0.2 percent, while Taipei rallied 1.3 percent. However, Sydney dipped 0.1 percent and Wellington shed 0.5 percent. In early European trade London rose 0.4 percent and Paris added 0.3 percent. Frankfurt was closed for a public holiday. The positive news also lifted the dollar, which had faced some selling pressure after Donald Trump earlier in the year imposed tariffs on steel and aluminium imports. The greenback was sitting at its highest level against the euro since December, while it was at a four-month peak against the yen. “After the US-China agreement on backing off from imposing trade tariffs on each other, one risk-off factor was removed, which pushed the dollar up against the yen,” Marito Ueda, senior dealer at FX Prime in Tokyo, told AFP. Traders are awaiting the release on Wednesday of minutes from the Federal Reserve’s latest policy meeting, hoping for fresh clues about its plans for raising interest rates. Continuing improvement in the US economy has fanned expectations the central bank will lift borrowing costs four times this year. Trump’s bonfire of the treaties sweeps towards the WTO President Donald Trump has the World Trade Organization in a chokehold, and the United States has made clear what he wants: no more judicial rulings that interpret WTO rules to Washington’s disadvantage. Trump has effectively engineered a crisis in the WTO’s system of settling global disputes by vetoing all appointments of judges to its appeals chamber. True to the president’s style, his ambassador to the Geneva-based body, Dennis Shea, is unapologetic about shrinking the supreme court of world trade to a size where it will struggle to function. “The United States is not content to be complacent about this institution,” Shea told fellow WTO ambassadors this month. “And the leadership that the United States will bring to the WTO in the coming months and years will consequently involve a good deal of straight talk and a willingness to be disruptive, where necessary, in the interest of contributing to a stronger, more effective, and more politically sustainable organisation.” Trump has proved willing to risk a global trade war in combating any treaties and practices he regards as unfairly disadvantaging US companies and workers, imposing tariffs on steel and aluminium imports globally because of overproduction blamed on China. agencies Key figures Tokyo – Nikkei 225: UP 0.3 percent at 23,002.37 (close) Hong Kong – Hang Seng: UP 0.6 percent at 31,234.35 (close) Shanghai – Composite: UP 0.6 percent at 3,213.84 (close) London – FTSE 100: UP 0.4 percent at 7,812.98 Euro/dollar: DOWN at $1.1730 from $1.1780 at 2100 GMT on Friday Pound/dollar: DOWN at $1.3416 from $1.3471 Dollar/yen: UP at 111.35 yen from 110.77 yen Oil – West Texas Intermediate: UP 41 cents at $71.69 Oil – Brent North Sea: UP 44 cents at $78.95 per barrel New York – Dow: FLAT at 24,715.09 (close). Published in Daily Times, May 22nd 2018.