HONG KONG — A thaw in troubled trade relations between the United States and China cheered global investors on Monday, sending Asian and European markets higher and paving the way to a strong opening for Wall Street.
The question for investors now is whether the peace will last and a deal will be reached, or if talks will once again break down.
Stocks in China led the broad rally early Monday in Asia, with major indexes rising about 2 percent or more. Later, European markets were trading about 1 percent higher. Futures markets suggested American stocks would open higher as well. The price of gold and other traditional investor safe havens fell, further underscoring the positive vibes.
President Trump and his Chinese counterpart, Xi Jinping, agreed on Saturday on the sidelines of the Group of 20 summit meeting in Osaka, Japan, to resume trade talks, raising hopes that they could ease a trade war that has spooked investors around the world. Mr. Trump also agreed to loosen restrictions on the sale of American technology to Huawei, the Chinese maker of telecommunications gear, as long as that technology has no national security applications.
It is far from clear whether the détente will result in a deal. The two sides had seemed close to an agreement until May, when talks broke down, throwing a shadow over global markets. In comments on Sunday, the Trump administration suggested wide gaps remain between the two sides.
“Although the agreement will likely partially relieve recent negative sentiment in the financial markets and support near-term growth, it stops short of removing existing tariffs,” Michael Taylor, chief credit officer for the Asia-Pacific region for Moody’s Investors Service, the ratings firm, said in a note to investors. The firm said it continued to believe that the trade war would trim economic growth for both the United States and China.
The truce is unlikely to change investor sentiment over the long haul unless signs emerge that the two sides are inching toward a final deal.
“During our recent roadshows, the majority of investors still feel highly uncertain about the prospect of any trade agreement,” Larry Hu, chief China economist at the Macquarie Group, said in a note, referring to presentations companies give to potential investors. “As such, the temporary truce reached during the G20 meeting could only do so much to lift sentiment.”
Even with the truce, economic conditions look weak for China, one of the world’s most important engines of economic growth. A Chinese survey of purchasing managers suggested that the manufacturing sector continued to weaken in June.
In China, the Shanghai Composite Index closed up 2.2 percent on Monday, while the technology-heavy Shenzhen Composite Index closed 3.5 percent higher. Hong Kong markets were closed for a holiday.
Japan’s Nikkei 225 Index gained 2.1 percent.
In Taiwan, the Taiex index was up 1.5 percent, while South Korea’s Kospi Index was flat.
In European trading on Monday morning, Frankfurt’s DAX was 1.2 percent higher, the FTSE 100 in London gained 1 percent and the CAC 40 in Paris was 0.7 percent higher.