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US stock futures shot higher on Monday in the wake of a US-China deal to temporarily slash reciprocal tariffs, a reprieve for markets fretting about the economic damage from a trade war.
S&P 500 futures (ES=F) soared 3%, while Dow Jones Industrial Average futures (YM=F) futures surged 2.4%, or around 1,000 points. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led gains, rocketing up 4%.
Wall Street is setting up for a banner day after the US and China put tariffs on pause for 90 days, as the scope of the tariff reductions surprised investors. The US is dropping its duties on most Chinese imports from 145% to 30%, while China is lowering its 125% tariff on US goods to 10%.
Read more: The latest on Trump’s tariffs
Investors jumped into shares of Big Tech megacaps bruised by trade war worries. AI chip leader Nvidia (NVDA) soared 5%, with Amazon (AMZN), Apple (AAPL), and Tesla (TSLA) also surging.
But pharma stocks tumbled, with the sector in line for a trade war hit after President Trump vowed on Sunday to cut US drug prices by up to 80%. Shares of Danish weight-loss drug maker Novo Nordisk (NVO, NOVO-B.CO) slid, while US rival Eli Lilly (LLY) among others also lost ground.
Meanwhile, the dollar (DX=F) and US Treasury yields (^TNX) climbed, while oil (CL=F, BZ=F) powered higher to lead a rally in commodities.
Traders will get their first sense of the initial inflationary effects of Trump’s tariffs with the release of key inflation data this week. April’s Consumer Price Index (CPI) report is due Tuesday, followed by retail sales and the Producer Price Index (PPI) on Thursday.
Notable earnings this week include Fox (FOXA), Monday.com (MNDY), Chegg (CHGG), all due to release results on Monday. Sony (SONY), Alibaba (BABA), and Wallmart (WMT) are due later in the week.
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Tech stocks stage major rally premarket on China tariff pause
US tech stocks rallied across the board on the news of a US-China trade deescalation, lifting futures on the Nasdaq Composite (NQ=F).
Amazon (AMZN), the No. 1 trending ticker on Yahoo Finance Monday morning, spiked 7.6%. The tariff pause is likely a welcome sign for the e-commerce giant, whose sellers often source goods from China.
In other tech names, Tesla (TSLA) soared 7.8%, Apple (AAPL) surged 6.2%, Meta (META) added 5.5%, and Alphabet (GOOG, GOOGL) advanced 2.4%.
Chipmakers also rallied, with Nvidia (NVDA) and AMD (AMD) up 4.5% and 5.5%, respectively.
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Stock futures surge as US-China agree to cut tariffs
Stock futures are surging after the US and China agreed to slash tariffs and deescalate the two countries’ trade war.
S&P 500 futures (ES=F) climbed 3%, while Dow Jones Industrial Average futures (YM=F) gained 2.4%, or around 1,000 points. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led gains, soaring 3.8%.
Meanwhile, the US dollar (DX-Y.NYB) gained 1.4%. Bitcoin (BTC-USD) declined slightly, down 0.25%. and Gold (GC=F) tumbled 3.6% to trade around $3,220 per ounce.
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Pharma stocks tumble as Trump vows to cut US drug prices
Bloomberg reports:
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Analysts react to US-China tariff pact
Investors worldwide are assessing the US-China deal to reduce their hefty rates of reciprocal tariffs, slashed by 115 percentage points to 10% on both sides.
Aaron Hill, FP Markets’ chief analyst
This “marks a pivotal moment in global trade dynamics. However, the 90-day timeframe indicates these tariff cuts are a negotiation tactic rather than a permanent resolution, creating uncertainty about long-term trade policies.”
Kenneth Broux, Societe Generale senior FX and rates strategist
“There is a de-escalation between China and U.S. resulting in a reduction of tariff on Chinese goods to 30% and Chinese tariffs on US goods to 10%. It’s a clear vote by the market in favour of riskier assets. It’s a step in the right direction and a positive of U.S. assets and U.S. economy.”
Jane Foley, Rabobank head of FX strategy
“That doesn’t mean that we’re back to where we were before the Trump inauguration, the 10% baseline tariff still exists everywhere, the 90 pause is there and the clock is starting to tick. The overall scenario is not as bad as it could have been, but we still have a fair amount of uncertainty about where these tariffs will settle, their impact on world growth and central bank policy.”
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Oil leads commodity rally as gold retreats
Crude oil, copper (HG=F) and crop futures rose, but gold prices sank after the US and China said they had agreed to a mutual reduction in tariffs.
Brent crude rose 2.4% to trade above $65 a barrel, while WTI crude jumped 2.6% to almost $63 a barrel.
Bloomberg reported:
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Oil holds as traders seek clarity on US-China trade deal
Oil prices fluttered on Monday after optimism as traders looked for concrete outcomes from recent US-China trade negotiations, which both sides described as showing “substantial progress.”
Bloomberg reports:
