The US and China agreed to reduce tariffs, and global markets immediately increased in price.

Stock markets around the world rose in unison on May 12 after the US and China reached an agreement to significantly reduce tariffs on each other's goods in an initial 90-day period.

In Asia, Hong Kong's Hang Seng index was up 3.4% by late afternoon local time.

In Europe, Germany's DAX and France's CAC rose 1.2% and 1%, respectively, in early trading. London's FTSE also rose 0.3%.

US stock futures also posted positive gains. The Dow Jones Industrial Average is forecast to open 2.1% higher, while futures for the S&P 500 and Nasdaq (which are heavily weighted towards tech stocks) are up 2.7% and 3.6%, respectively.

Brent crude, the global oil benchmark, also rose 2.8%.

Previously, according to a joint statement released by the two countries on the same day, the US and China agreed to sharply reduce tariffs imposed on each other's goods during the first 90 days.

The announcement came after lengthy trade talks over the weekend in Geneva, Switzerland, between officials from the world's two largest economies.

According to the joint statement, as of May 14, the US will temporarily lower tariffs on Chinese goods from 145% to 30%, while China will cut import tariffs on US goods from 125% to 10%.

The two sides also agreed to establish "a mechanism to continue discussions on economic and trade relations", which will be co-chaired by Chinese Vice Premier He Lifeng, US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer.

"These discussions can be held alternately in China and the United States, or a third country as agreed by the parties. When necessary, the two sides can conduct working-level consultations on relevant economic and trade issues," the statement said.

On May 11, after the end of negotiations, Washington emphasized progress towards a "deal", while Beijing praised the general consensus on launching a formal economic and trade negotiation process.

The trade war has been affecting the economies of both the US and China. On May 9, US port officials told CNN that in the previous 12 hours, not a single cargo ship had left China for two major US West Coast ports, a situation that has not happened since the Covid-19 pandemic.