Global stock markets rallied and closed at record highs after the US and China signed the eagerly awaited phase one trade deal on Wednesday. Although several concerns still keep markets on edge, the initial optimism around a positive step towards reducing trade tensions saw the DOW closing above 29,000 for the first time, while SPX closed above 3289.

The trade deal optimism spilled over into today’s Asian session with the NIKKEI225 gaining around 0.14% in early trade while Asia-Pacific shares climbed 0.21% higher. The phase one deal signed will see the US suspend some tariffs and reduce some others on Chinese goods in exchange for China increasing purchases of US goods by around $200 billion over the next couple of years.

Even though the interim trade agreement does not eliminate tariffs on Chinese imports from the US side or touch upon more contentious issues like forced technology transfers and subsidies to Chinese state-owned companies, markets are trading with a risk-on sentiment for now. The phase one deal offers a slight relief from the escalating trade tensions and paves the way for the second phase of trade negotiations, which is set to tackle these key issues in the near future.