U.S.-China Tariff Deal Exceeds Expectations, Risk Assets Rally in Major Reversal! Nasdaq Futures Up 3%, Hong Kong Stocks Jump 6%, Oil Rises 3%, Gold..

TradingKey – Following high-level economic and trade talks, both China and the United States announced "substantial progress" in their negotiations. According to a joint statement released on May 12, China will cut its tariffs on U.S. goods from 125% to 10%, while the U.S. will reduce tariffs on Chinese imports from 145% to 30%. The news triggered a sharp rally in risk assets including U.S. futures, Hong Kong equities, and crude oil, while safe-haven gold tumbled more than 3%.

In a joint declaration following the U.S.-China Geneva trade talks, both nations acknowledged the importance of their bilateral economic relationship for each other and for global growth, agreeing to temporarily lower certain tariffs for a period of 90 days.

The easing of trade tensions boosted investor sentiment across global markets. The Hang Seng Tech Index surged over 6% shortly after 3:00 p.m., Nasdaq 100 futures rose more than 3%, and S&P 500 futures gained over 2.5%. Brent crude prices climbed nearly 3%.

Meanwhile, safe-haven assets sold off sharply, with gold plummeting 3.48% to USD 3,227.71 per ounce. Prior to this, the Trump 2.0 administration’s global trade war had fueled repeated surges in gold demand, as central banks and retail investors rushed to buy gold ETFs, pushing prices to record highs multiple times this year.

Before the release of the U.S.-China joint statement, rating agency Moody’s predicted that tariffs between the two countries would be halved in the coming weeks, while BNP Paribas forecasted that U.S. tariffs on China would fall to 45%.

J.P. Morgan analysts noted that the scale of the tariff cuts far exceeded market expectations, reflecting growing awareness from both sides that prolonged tariffs could damage global economic stability. Meanwhile, further negotiations represent a better path forward.

A Bloomberg reporter observed that judging by the strong market reaction, the U.S.-China agreement appears to be more substantive than investors had anticipated — featuring significant tariff reductions, coordinated negotiation efforts, and a commitment to continue talks, all of which bode well for future progress.