Italy’s populist leader Matteo Salvini offers to be reasonable about Italy’s deficit-ridden budget. Britain’s Teresa May negotiates a “soft Brexit” and stands down her Conservative Party opponents. And the Group of 20 meeting next week promises to produce at least a framework to resolve trade issues between China and the United States.

The slot machine registered three cherries overnight, and a stock market rally that began in Hong Kong quickly spread to Europe and the United States.

Part of the market’s misery during the last quarter was due to self-inflicted political wounds. America’s trade war with China took a big bite out of capital investment globally, as major corporations waited to see what would happen to global supply chains. Italy and Britain meanwhile raised the risk premium on European financial institutions. The cost of credit protection on an index of subordinated debt of European financials doubled from 100 basis points in January to 220 basis points in late November.

Markets reached something of a nadir in the US session on Friday, when the S&P fell more than 10% from its previous peak.

Monday’s Hong Kong session reflected hope that Presidents Trump and Xi Jinping would reduce trade tensions at their meeting next week in Buenos Aires. The only major news to come out of China during the Thanksgiving holiday weekend was an announcement that Germany’s Allianz Insurance was the first major Western financial institution to get permission to open a 100%-owned subsidiary in China. That is something of a breakthrough, confirming China’s promise to open its financial sector to foreign investment.

That started a global rally in equities. Italy’s populist leader Matteo Salvini agreed to study scenarios for a budget deficit target lower than the 2.2% of GDP that Italy had earlier proposed, despite the threat of sanctions from the European Community in Brussels. That hardly resolves Italy’s financial difficulties, but it does suggest that Italy’s government has no intention of provoking a confrontation with Brussels during the next several months.

British Prime Minister Teresa May, meanwhile, received European Community approval for a “soft” exit from the European Community, after facing down a challenge from the anti-Europe wing of her own party.

Europe’s populist wave appears to have crested. Key to Salvini’s calculations is the question of who he will be talking to in Germany. The earlier successes of the right-wing, Euroskeptic Alternative fuer Deutschland party had raised hopes in Italy that the present coalition of Christian Democrats and Social Democrats would face a significant domestic challenge, and Salvini declared his support for the AfD.

To Salvini’s consternation, the main beneficiary of weakness in the coalition was not the AfD, but the leftwing Green Party. The Greens are as pro-immigration as Salvini is anti-immigration. Meanwhile, Chancellor Angela Merkel’s hand-picked successor seems certain to succeed her as party leader, which leaves Salvini quite isolated.

Dovish talk by Federal Reserve Open Market Committee members and a suspension of hostilities in the US-China trade war would give markets an additional boost.