After exchanging threats of a trade war with American President Donald Trump, Chinese President Xi Jinping appears to have blinked in his back and forth with the US leader.
Xi appeased fears of a trade war between the United States and China by discussing plans to further open up the country's economy on Tuesday.
Some economic measures he said were under consideration: lowering import tariffs on automobiles, enforcing intellectual property of foreign groups, improving the investment environment for international companies, and reducing duties on consumer products.
The American stock market responded well to Xi's apparent conciliatory tone. The Dow Jones industrial average jumped 396 points at the open on Tuesday. The S&P and Nasdaq composite each rose over 1% at the start of trading on Tuesday. US carmakers' shares rallied as well to the encouraging news, as Ford, General Motors, Tesla, and Fiat Chrysler all saw gains at the opening.
"If you look at President Xi's speech, it was conciliatory and that feels like a de-escalation," said Art Hogan, who serves as the chief market strategist at investment bank B. Riley FBR. "That's what the market wants."
Xi's reported willingness to temper the chances of a trade war with the US could allow Trump to declare victory, Politico's Ben White wrote in his morning newsletter.
Greg Valliere, the chief global strategist at Horizon Investments, said it is too early for Trump to declare a win over his Chinese counterpart. But he called the developments a "big deal" for investors, saying it's clear that China wants to "lower the temperature" in the trade battle.
"The Chinese have pledged before to open up markets but haven't followed through," Valliere said in a note. "His endgame is unclear. But these comments from Xi have to be viewed as constructive.