Hong Kong and Shanghai led a surge across Asian markets Monday after the United States agreed to suspend imposing tariffs on China for three months, while oil prices soared on expectations of a big production cut.
In a much-anticipated meeting between Donald Trump and Xi Jinping at the weekend, the heads of the world's two biggest economies hammered out a deal that will see them hold off on their tit-for-tat tariffs row, which has roiled global equities for most of the year.
The US will hold off raising levies on Chinese goods on January 1 while China promised to buy more from the US and enter a 90-day period of talks to bring an end to the dispute.
If the negotiations, fail tariffs will jump from 10 per cent now to 25 per cent.
However, while the early reaction was positive, observers warned there were still major issues that need to be resolved.
The "imposition of no new tariffs is not the same as retracing the existing tariffs that have come into play this year and will gradually have an impact on the US economy", said Kerry Craig, global market strategist at JP Morgan Asset Management.
"Moreover, the ideology behind the trade tensions is still about strategic positioning of the two economies, which means until issues around technology transfer and (intellectual property) are resolved, nerves will persist.
"We anticipate that things are still likely to get worse before they get better, and that the negative sentiment impact created by the trade narrative will create additional market volatility."
The news also provided a boost to oil prices, which have been battered by concerns the trade war would hit demand for the commodity.
Both main contracts climbed more than four per cent, which provided a boost to regional energy firms with PetroChina up more than three per cent in Hong Kong and Woodside Petroleum up a similar amount in Sydney.
Traders are now looking ahead to a weekend meeting of OPEC and key non-OPEC members, where they will make an announcement on how much they will cut and for how long.
"Post-G20 sentiment is a bit more positive than expected but still very much work in progress, so perhaps the most crucial event in December next to (Britain's) Brexit vote could very well be the OPEC summit."
The upbeat sentiment sent higher-yielding and emerging market currencies higher against the dollar.
The Mexican peso was more than one per cent higher, South Korea's won jumped 0.5 per cent, the South African rand climbed 0.8 per cent and the Australian dollar put on 0.8 per cent.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)