NZ sharemarket rises on open after Wall St rallies on US-China tariff announcement

The bulls have returned to Wall Street.

New Zealand stocks rose after Wall Street staged a huge rally overnight on news that China and the United States had agreed to lower tariffs they had set for each other.

After 20 minutes, the S&P/NZX50 Index was up 54.73 points or 0.43% at 12,731.48.

Overnight, US President Donald Trump touted a “total reset” of relations with China that included a steep drop in levies between the countries, AFP reported.

The new apparent truce would slash respective tariffs by 115 percentage points for 90 days.

The Dow Jones Industrial Average jumped 2.8% to close at 42,410.10. The broad-based S&P 500 rallied 3.3% to 5,844.19, while the tech-rich Nasdaq Composite Index rocketed 4.4% to 18,708.34.

NZ trading starts at 10am.

“We will see a reaction in the NZ market today, but certainly not as strong as the reaction has been in the US overnight,” Grant Davies, investment adviser at Hamilton Hindin Greene said.

“There will be plenty of companies who will benefit from a reduction in trade wars, so we expect the NZ market to rally on the back of that,” he said.

“Obviously the tariffs were going to have an impact on global growth.

“Those worries have dissipated somewhat because we don’t know what’s going to happen after 90 days,” Davies said.

AFP said the US market was looking at the overall trend towards de-escalation.

Since returning to the White House, Trump had imposed tariffs of 145% on many Chinese imports, while Beijing hit back with duties of 125% on US goods.

Following weekend talks between top officials in Switzerland, the US agreed to temporarily lower its tariffs on Chinese goods to 30% while China will reduce its own to 10%.

Besides lower levies, the US-China announcement and an agreement last week with Britain “will convince business leaders that a final deal is going to be reached at some point”, said a note from Briefing.com.

“This should allow them to make investment/spend decisions,” the note said.

Markets are looking ahead to Tuesday’s US consumer price index data for April, which will be scrutinised for evidence on the extent that tariffs result in pricing pressure, AFP said.

Jamie Gray is an Auckland-based journalist, covering the financial markets, he primary sector and enegy. He joined the Herald in 2011.