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.
Trump hailed the meeting -- held on the sidelines of the G20 in Buenos Aires -- as "amazing and productive... with unlimited possibilities for both the United States and China".
The news lit a fuse under Asian markets, with Hong Kong and Shanghai each rallying more than two per cent, while the Chinese yuan, which has tumbled this year on worries about the trade row, jumped.
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Tokyo climbed 1.4 per cent by the break, Sydney and Seoul each rose 1.6 per cent, Singapore was 1.9 per cent higher and Taipei piled on two per cent.
"This is the best outcome that we had hoped for out of this meeting," said Frances Cheung, head of Asia macro strategy at Westpac Banking Corp.
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."
"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."