They agreed to take down most of their tariffs that economists warned could start a recession and create shortages on US store shelves.

The S&P 500 was 2.7 per cent higher in early trading on Monday (late Monday and early Tuesday AEST).

The Dow Jones Industrial Average jumped 981 points, or 2.4 per cent, and the Nasdaq composite was 3.7 per cent higher.

Crude oil prices jumped because a global economy less weakened by tariffs would be hungrier for fuel.

It wasn’t just stocks surging following what one analyst called a “best case scenario” for US-China tariff talks.

Crude oil prices jumped more than 3 per cent because a global economy less weakened by tariffs would be hungrier for fuel. The value of the US dollar climbed against everything from the euro to the Japanese yen to the Swiss franc.

And US Treasury yields jumped on expectations that the Federal Reserve won’t have to cut interest rates so deeply this year in order to protect the economy from the damage of tariffs.

Of course, conditions could change quickly again, as Wall Street has seen all too often in Trump’s on-again-off-again rollout of tariffs. Plus, the reduction in US and China tariffs will last only 90 days.

That’s to give the world’s two largest economies time for more talks followed last weekend’s negotiations in Geneva, Switzerland, that the U.S. side said had made “substantial progress”.

Until then, a joint statement said the United States will cut tariffs on Chinese goods to 30 per cent from as high as 145 per cent.

China said its tariffs on US goods would fall to 10 per cent from 125 per cent. That follows a deal the US announced last week with the United Kingdom that will bring down tariffs on many UK imports to 10 per cent.

Big challenges remain in the negotiations between China and the US, but the mood nevertheless was ebullient across Wall Street on Monday, and gains were widespread.