Image Source: Business Standard
Stocks of top cosmetics firms jumped on Monday following an agreement by the United States and China to sharply lower tariffs and a 90-day ceasefire in their ongoing trade war. The breakthrough, following top-level negotiations in Geneva, had both countries agree to cut tariffs on the other's products, with the US reducing its rate on Chinese imports from 145% to 30% and China cutting its tariff on American products from 125% to 10%. The 115-percentage-point cut will remain in place for at least 90 days while negotiations continue.
This relief of trade tensions set off a general rally on world markets. Beauty stock shares were some of the biggest gainers. E.l.f. Beauty spiked 13.9%, Ulta Beauty increased 6.1%, and Coty grew 8.1% during Monday's session. The heavy increases reflect newly found investor hopes for those businesses with large exposures to global supply chains, and especially those whose manufacturing and packaging are based in China.
The beauty industry had been under intense pressure over the past few weeks as rising tariffs had risked increasing costs and disturbing supply lines. E.l.f. Beauty, which imports around 80% of its products from China, had been particularly exposed. The tariff relief and cut now provide welcome respite, returning assurance to the sector's short-term prospects.
The overall market was also in high spirits. The Dow Jones Industrial Average climbed 2.5%, S&P 500 increased by 2.8%, and Nasdaq climbed 4%, hitting their highest point since springtime. The accord is being greeted as a move to stabilize global commerce and creating an opening for more prolonged negotiations, with the possibility that a lasting solution would follow.
Sources: Economic Times, Forbes, Morningstar, Angel One, Fox 13 News
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