Shares touched a 22-month high as investors maintain hopes for the trade deal

On Tuesday, world shares touched their highest 22-month high as investors kept hopes alive that the U.S. and China could reach an agreement to end their damaging war.

The world’s largest economies are in discussions on an initial deal to end the 18-month trade dispute, which had damaged supply chains and upset global markets. However, the U.S. is about to impose a new set of tariffs on Chinese goods from Dec.15.

A lack of clear progress on talks has not stopped investors encouraged by the growing sense that risks recession, a specter through the year, have receeded.

A loose monitory policy from major central banks, including PBOC, has helped boost expectations for equities.

The MSCI is a world equity index that tracks shares in 47 countries, rose 0.1% to reach its highest since January last year.

European shares also gained, with the broad Euro STOXX 600 gaining 0.4% to move to its highest since July 2015.

Indexes in Frankfurt and London gained 0.4% and 0.5%, respectively.

Wall Street futures indicated a positive start, too, adding 0.2%.

Investors said assumptions that a possible first trade deal had outweighed any creeping doubts on progress in talks that stemmed from lack of apparent progress. There was also a growing sense of a positive outlook on the economic fundamentals ahead.

“Consensus is assuming that there will be a cyclical upturn. It’s like the market lowered its guard on the big risk metrics — and that has triggered a reweighting of funds from bonds to equities,” said Stéphane Barbier de la Serre. He is a strategist at Makor Capital Markets.

Hopes that China will deliver some economic stimulus in addition to Monday’s surprise interest rate cut. The closely watched lending rate boosted sentiments in Asian markets.

The MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%. Shanghai blue chips gained 1% while Hong Kong’s Hang Seng up 1.4%.

The pessimistic mood in China over a trade deal

On the trade front, CNBC had reported the mood in China was pessimistic about the possibility of a trade deal with the U.S. – buffeting the dollar.

However, signs that suggested growing detente between the sides clouded the picture: The U.S granted a new extension to its firms to keep doing business with Huawei – China’s telecoms giant.

That lack of clear progress unnerved some investors.

“The longer we go on, the more concerns will arise. The reality is the clock is ticking,” said Michael McCarthy. He is the chief market strategist at brokerage CMC Markets in Sydney.

In commodities, crude futures lost 0.2% to $62.29 a barrel, with jitters over trade and expecting a rise in U.S. inventories jangling nerves.