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World stocks came off six-week lows and U.S. stock futures jumped on Monday (March 26) on optimism that the United States and China are set to begin negotiations on trade, easing fears about a trade war between the world’s two largest economies.

“Exemptions on steel/aluminum tariffs have already been granted for other important trade partners (Canada, Mexico, EU), which suggests the U.S. president is using this approach more for negotiating leverage rather than any real intention to start a global trade war,” wrote Mike van Dulken, head of research at Accendo Markets, noting a “measured” and “nuanced” response from China so far.

Fears of a trade war mounted earlier this month after Trump first slapped tariffs on steel and aluminum imports, and then on Thursday specifically targeted China by announcing plans for tariffs on up to $60 billion of Chinese goods.

Signs of potential compromises were also supported by news overnight that South Korea would be exempted from U.S. steel tariffs in a revision of the bilateral trade pact between the two countries.

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