Oil Leads Commodity Rally After U.S.-China Tariff Ease
Oil, base metals and crops rose while gold fell after China and the U.S. agreed to roll back tariffs on each other, following trade talks over the weekend.
Brent crude rose as much as 3.7% in London and copper gained 1.4%. European natural gas, soybeans and iron ore also advanced. Shares of top mining companies jumped. Meanwhile, bullion fell as demand eased.
The easing between the world’s two largest economies brought relief to commodity markets that have been rattled by record-high tariffs that have dented global growth prospects in recent weeks. Oil watchers have cut their demand forecasts and there have been signs in recent weeks that the trade war is hurting the number of goods arriving in the U.S.
China is set to reduce its tariffs on U.S. goods to 10% from a level that rose to 125% when the two countries began imposing retaliatory curbs on each other. The cuts will last for 90 days, while the U.S. will reduce its own curbs to 30% from 145%.
At a briefing after the talks, U.S. Treasury Secretary Scott Bessent said neither country wants its economy to be separated. In a statement, the two countries said they would establish a mechanism to continue discussions on economic and trade ties.
The announcement came after a weekend of talks in Geneva involving Bessent, U.S. Trade Representative Jamieson Greer and their Chinese counterparts.
The lower levies “allay concerns about a prolonged economic downturn that hurts demand,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The key question is whether today’s news marks the peak of optimism, given the U.S. is unlikely to fully back down from its stance on China.”
Oil prices are still down 13% since early April as crude markets also contend with rising supplies from the Organization of the Petroleum Exporting Countries and its allies. Shares of major miners including Glencore Plc and Rio Tinto Plc rose more than 5% in London. Miners also led gains in European equity markets.
Source: Bloomberg
