S&P 500 Futures Jump As China Trade Rhetoric Cools: Markets Wrap

US equity-index futures climbed and oil rebounded after President Donald Trump signaled an openness to a deal with China, improving sentiment after markets were rattled by a sharp escalation in trade tensions.

US Equity-Index Futures Climb

Contracts for the S&P 500 and the Nasdaq 100 indexes jumped more than 1% as the administration toned down its rhetoric after Trump threatened tariffs of 100% on China in response to Chinese export controls. Treasury futures dropped and oil rose more than 1% while cryptocurrencies stabilized after a selloff Friday. Silver swung near a record as a historic short squeeze in London and trade tensions roiled the market, while gold set a new peak.

Asian Stocks Retreat

Declines in Asian stocks, which were closed when Trump made his comments Friday, indicate concerns about the durability of the truce. Shares in South Korea and Australia retreated while futures indicated losses for Hong Kong and China. A gauge of Chinese technology companies listed in the US plunged 6.1% Friday, their biggest loss since April. Japan is closed for a holiday.

Big Downward Moves in Risky Assets

Big downward moves in risky assets have been a rarity of late, which may itself be a factor in the jarring reaction to trade tensions. Since the tariff-fueled meltdown in April, the S&P 500 has surged on optimism about AI and hopes for Federal Reserve rate cuts. The gauge is trading near one of its highest valuations in 25 years — leaving a thin cushion for bad news.

“It doesn’t look like a replay of April, rather more like a back-and-forth pre-trade negotiation phase before the November deadline of the US-China truce,” said Anna Wu, a cross-asset strategist at Van Eck Associates Corp. “Markets are pricing in to a certain degree of overselling on Friday.”

China Trade Tensions

After China unveiled wide-ranging global export controls on products containing even traces of certain rare earths this past week, Trump fired back by threatening to cancel a planned in-person meeting with Xi Jinping — their first in six years.

Trump then said he would impose an additional 100% tariff on China as well as export controls on “any and all critical software” beginning Nov. 1.

The administration then signaled an openness Sunday to a deal with China with Trump hinting at a possible off-ramp for Xi, while issuing a veiled threat that a full trade war would wound China.

That suggests the US wants to keep up the pressure on China to reverse its most recent trade moves, while trying to reassure spooked markets that a tit-for-tat escalation isn’t inevitable.

Indian Investors and Traders

For Indian investors and traders, it is essential to stay updated on the latest developments in the US-China trade war and its impact on the global markets. The Nifty index and Sensex index have been volatile in recent times, and any escalation in trade tensions could lead to a further decline in the markets.

Conclusion

In conclusion, the US equity-index futures climbed and oil rebounded after President Donald Trump signaled an openness to a deal with China, improving sentiment after markets were rattled by a sharp escalation in trade tensions. However, the trade tensions between the US and China are far from over, and any further escalation could lead to a decline in the markets. Indian stock market investors and traders should stay cautious and keep a close eye on the developments in the US-China trade war.