Market volatility eases as US and China reduce tit-for-tat tariffs

Bloomberg reports that financial jitters eased after the US and China agreed to reduce tit-for-tat tariffs for a while. The CBOE Volatility Index (VIX) fell nearly 3 points, hitting a 45-day low. The gauge is now trading below its historical average of 20 points.

Citigroup's Stuart Kaiser said that easing trade tensions between the world's two largest economies is having a significant impact on near-term risks.

The reduction in US duties on Chinese goods has already exceeded analysts' expectations, David Seif from Nomura noted. Under the agreement, the overall tariff rate on most Chinese goods will be reduced from 145% to 30%, while Chinese fees on American products will be cut from 125% to 10%. However, experts warn that the lack of a long-term deal poses the risk of renewed trade tensions between the two nations.

In response to the news, the S&P 500 jumped 3% to its highest level since early March. Despite the current stabilization, investors are bracing for a return to volatility in the future.