Oil prices jumped more than 3% on Monday while soybeans traded at close to their highest in over three months after the United States and China paused trade tariffs for 90 days, bringing some relief to markets.
The world’s two biggest economies agreed to temporarily slash reciprocal tariffs as they negotiate to end a damaging trade war that has stoked fears of recession and roiled financial markets.
The U.S. will cut extra tariffs on Chinese imports to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%.
“These new rates return tariffs to pre-Liberation Day levels and represent a better-than-expected de-escalation,” said ING commodities strategist Ewa Manthey, referring to April 2 when U.S. President Donald Trump announced a slew of levies on trading partners.
Brent and U.S. WTI crude futures rose more than 3% after the agreement between two of the world’s largest oil consumers, adding to last week’s gains of around 4% .
“Crude oil, recently under pressure from an OPEC+ production hike, has initially emerged as the biggest winner, with the news helping to stabilise the demand outlook,” Saxo Bank analyst Ole Hansen said in a note.
In the gas market, the benchmark Dutch front-month contract rose to 36.18 euros per megawatt hour (MWh), or $11.79/mmBtu, the highest since April 16 based on data from LSEG, as of 1229 GMT.
Soybeans have been the hardest-hit U.S. crop in the trade standoff, as China – the world’s top soy importer – shifts its purchases to Brazil from the U.S., the world number two exporter.
The Chicago Board of Trade’s most-active soybean contract rose 1.7% to $10.69 a bushel, close to its highest since early February.
As investors snapped up riskier assets, spot gold prices fell as far as $3,207.3 an ounce and were last down 2.85% at $3,229.88 .
Industrial metals prices rose as growth and demand fears eased, though traders said the market remained cautious.
Benchmark copper on the London Metal Exchange was 0.9% higher at $9,528 a metric ton while aluminium gained 2.9% to $2,488.
“Tariffs have been lowered for a limited period, but we don’t know what will happen after that, and whether (the U.S. and China) will be able to reach a permanent deal,” said Investec head of commodities Callum Macpherson.
“The longer this uncertain environment drags on the greater the impact on the real economy will be.”
Source: Reuters