With trade war fears easing after the overnight speech from Chinese president Xi, US markets have opened sharply higher.

The Dow Jones Industrial Average is currently 390 points or 1.63% higher, while the S&P 500 is up 1.36% and the Nasdaq Composite has climbed 1.65%.

Commenting on the Xi speech to Reuters, strategist Art Hogan at Wunderlich Securities in New York said:

The expectation was [the Xi speech] could have gone one of two ways: he could have been aggressive about US tariffs or been conciliatory, and it feels like he’s more conciliatory.

Stronger than forecast US producer price figures for March give more ammunition for the Federal Reserve to raise interest rates again later this year.

The Fed has indicated it could increased borrowing costs another two times in 2018 but some expect another rise on top of that if the economic data merits it.

So a 0.3% rise in the producer price index last month adds fuel to those expectations. That is an increase from the 0.2% rise in February, and higher than analyst forecasts of 0.1%. The year on year increase in March was 3%, up from 2.8% in the previous month and ahead of the 2.9% expected.

The Fed’s preferred inflation measure, the personal consumption expenditures index, rose to 1.6% after being at 1.5% for four months.

The Bureau of Labor Statistics, which released the data, said:

A major factor in the March advance in prices for final demand services was the index for outpatient care (partial), which climbed 0.4 percent. The indexes for machinery, equipment, parts, and supplies wholesaling; cable and satellite subscriber services; airline passenger services; food and alcohol wholesaling; and hospital inpatient care also moved higher. In contrast, margins for automotive fuels and lubricants retailing fell 10.4 percent. The indexes for apparel, footwear, and accessories retailing and wireless telecommunications services also decreased.

The average British household benefited from the Bank of England’s emergency interest rate cut in the financial crisis to the tune of almost £9,000 in pay and £90,000 in household wealth, according to its chief economist.

Speaking in Australia, Andy Haldane is defending some of the benefits from low interest rates just before Threadneedle Street looks to increase them to levels unseen since the 2008 crash began.

According to him, the impact of low rates and quantitative easing has been to keep more people in work - helping them with their earnings - and to keep borrowing costs cheap to help cut mortgage costs. Asset prices have also been inflated, helping those who held them - even if they got less on their cash savings held in bank accounts.

The significance of the loose monetary policy from the Bank is so significant, he says, that GDP in the UK would have been around 8% lower, unemployment 4 percentage points higher and the level of consumer prices 20% lower without its package to cut rates to 0.5% and inject £435bn into the economy through QE.

Just 4% of households were made £500 or more worse off when taking income and wealth effects together, he says.

And there is another twist in the trade dispute between the US and China. Associated Press reports:

China is filing a complaint with the World Trade Organisation against U.S. tariffs on steel, aluminium products.

The Geneva-based trade body said on Tuesday that China has requested 60 days of consultations with the United States to resolve the dispute.

If the two sides can’t agree on a solution, the next step could be for Beijing to request a ruling from a panel of trade experts.

China claims the duties of 25 percent on imports of steel and 10 percent on imports of aluminum products breach international trade rules.

The Bank of England is not the only central bank to be considering reigning in the financial stimulus - low interest rates and quantitative easing - that have supported stock markets since the financial crisis.

Speaking in London, European Central Bank policymaker and Bank of Austria governor Ewald Nowotny said it was now time to “start the gradual normalisation of monetary policy.” He said:

We are at an important turning point in monetary policy. We must normalise policy not too soon but not too late.

He said there was the risk of stifling the recovery if the ECB tightened monetary policy too soon, but also a risk of an asset boom if it tightened too late.

UK interest rates should be raised again without delay, a leading Bank of England policymaker has said.

After its meeting last month the Bank hinted at an increase in May, and in an interview with Reuters, Ian McCafferty said the prospect of faster pay rises and a strong pick-up in the global economy emphasised the need for dearer borrowing costs before long.

McCafferty said that wage growth, which has lagged inflation for much of the past decade, could prove to be stronger than many of his colleagues on the monetary policy committee believed. He told Reuters:

We shouldn’t dally when it comes to tightening policy modestly,.

Reuters adds:

McCafferty said he could not be certain about whether to vote again for a rate rise until May’s policy meeting, but there had been no data or Brexit developments so far to make him think he was wrong in March to vote to raise rates to 0.75 percent.

The former chief economic adviser to the Confederation of British Industry has been in the minority of BoE policymakers pushing for a rate hike previously in the past four years.

Speaking in his office in the BoE on Monday... McCafferty said that as well as the boost from the world economy’s strong recovery, he thought there was now no slack left in Britain’s labour market.

Unemployment at its lowest rate since 1975, skill shortages and signs that employers were resorting to higher wage offers to lure staff from rival firms or stop them from leaving would also create inflation pressure.

“It’s not wages suddenly bursting away, but it gives you a modest upside risk,” said McCafferty, whose term at the central bank ends in August.

And the “jury is still out” on whether the inflationary hit from the fall in the value of the pound after the Brexit vote in 2016 would fade as quickly as expected, he said.

“On balance, those three arguments give me some potential modest upside risks to the (inflation) forecasts,” McCafferty said.

While the BoE had been wrong in the past about wages finally gaining momentum, labour market surveys so far this year showed that the recent recovery in the headline rate of growth of pay to nearly 3 percent looked more sustainable this time, he said.

Often called one of the BoE’s most hawkish policymakers, McCafferty said there had been a case for following up November’s rate move with another hike as early as February.

But he held off to avoid surprising households who had been told by the BoE that it plans to raise rates only gradually...

On Brexit, McCafferty said British exporters remained in “a sweet spot”, helped by the weakness of the pound while concerns that they might lose business with supply chain customers elsewhere in the EU had so far proven overdone.

But there were signs that British companies were wary about making long-term investments, and potential Brexit stumbling blocks would remain, he said.

“That’s going to be a permanent feature of the landscape,” McCafferty said.

As fears of a trade war between China and the US ease - for the moment - after president Xi’s speech overnight, European markets have opened in a positive mood.

The FTSE 100 is up 0.5% or 41 points, while Germany’s Dax has added just over 1%, France’s Cac has climbed 0.8% and Spain’s Ibex is 0.6% better.

And the US futures are predicting the Dow Jones Industrial Average - which added just 0.19% in the end on Monday - will open around 360 points higher or 1.5%.