comment from Stuart Rumble, head of investment directing, Asia Pacific at Fidelity International following US and China trade talks:

"The US and China have issued a joint statement announcing a temporary reduction in tariffs. The US will cut tariffs on Chinese goods from 145% to 30% for a 90-day period, while China will lower its tariffs on US imports from 125% to 10% over the same timeframe. Equity markets have responded positively, with Chinese and Hong Kong stocks rallying on the news.

This short-term reprieve is an encouraging signal for markets and should help restore some confidence. However, while the headline tariff cuts are sharp, they are also time-limited. But for now, sentiment may matter more than substance for market confidence - and domestic political support - than the content of any substantive agreement. So, what should investors take away from this announcement?

First, although the reductions are temporary, they represent a notable shift in the overall effective tariff burden. The high US-China tariff regime has already caused major disruption, reducing bilateral trade between the world’s two largest economies and increasing the risk of a broader global slowdown. While neither economy is currently near a breaking point, a meaningful reduction in overall tariffs helps ease that risk. The US administration is likely to continue supporting demand through extended tax relief and other fiscal measures aimed at supporting household spending. China, having spent years preparing for renewed trade tensions by reducing reliance on US exports, also retains the capacity to expand domestic stimulus. These developments, coupled with lower trade barriers, should be supportive for both equity and credit markets.

Second, even with these tariff cuts, much of the shift in global trade flows has already begun. The decline in direct US-China trade has driven increased rerouting through Southeast Asia and other so-called third countries. Tariff differentials remain relevant and will continue to shape trade flows based on relative competitiveness, infrastructure capacity, and domestic policy responses. While these structural shifts will take time to materialise, as companies adapt their supply chains and logistics, they are important for investors considering their allocations to Asia.

Lastly, while encouraging, this development perhaps should be seen by investors as an easing of tensions within a broader, long-term shift in the US-China relationship towards greater self-sufficiency."