US futures
Dow futures 2.7% at 42314
S&P futures 3.1% at 5832
Nasdaq futures 4% at 20848
In Europe
FTSE 0.58% at 8600
DAX 0.55% at 23617
- Stocks surge after US-China trade deal following talks in Geneva
- The two sides agree to pause tariffs at pre-Liberation Day levels for 90 days
- Apple (NASDAQ:AAPL) jumps 6%, Amazon (NASDAQ:AMZN) soars 7%
- Oil soars 3% on US–China trade deal
Stocks Rise as the US & China Reduce Tariffs
U.S. stocks opened significantly higher as the US and China agreed to a deal to reduce tariffs, signaling a de-escalation in the trade war.
The US will lower tariffs to 30%, down from 145%, and Chinese taxes on US imports will fall to 10% from 125%. These new measures will be effective for 90 days. The market is now reassessing what these lower tariffs mean for the outlook of US businesses and the economy.
The volatility index, which is considered to be Wall Street’s fear gauge, briefly slips below the key 20-point threshold for the first time since late March as the mood improves.
The deal between the US and China comes just days after the US-UK trade agreement eased concerns that Trump’s reciprocal tariffs, announced five weeks ago, would spark a worldwide recession.
NASDAQ has fully recovered from its declines from the April 2 tariffs, thanks to Trump’s softening stance and upbeat earnings reports.
Whilst trade developments will remain a key focus, attention will also be on US CPI inflation data due on Tuesday, retail sales, and a speech by Federal Reserve Jerome Powell on Thursday.
The market currently expects the Fed to deliver two rate cuts by the end of 2025, in accordance with its guidance.
Corporate News
Apple’s stock is rising 6.5% following the US-China trade deal, and according to reports, the tech giant is considering raising prices for its iPhones.
Amazon is jumping over 7% as the e-commerce giant’s supply chains are heavily linked to China.
Oil majors, including Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM), are rising around 2%, tracking oil prices higher in the wake of a trade deal between the two largest oil consumers in the world.
Chinese stocks, including Alibaba (NYSE:BABA), JD.com, and Baidu (NASDAQ:BIDU), are trading substantially higher. This is because Chinese stocks benefit from easing tensions between the US and China.
Pharmaceuticals such as Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY), and Johnson & Johnson (NYSE:JNJ) are falling after Trump promised to cut prescription drug prices by 59% but gave no details of how he would achieve this.
Nasdaq 100 forecast – Technical Analysis.
The Nasdaq’s recovery from the 16325 low has surged above resistance at the 200 SMA at 20,220 as it heads towards 21k. The RSI is above 50, supporting further gains while it remains out of overbought territory. Buyers will look to rise above 21k to bring 22k into focus ahead of 22,235 and fresh record highs. Support is seen at 20,300, the 200 SMA, and 20k, the psychological level. Below here, sellers could look towards 19k.
FX Markets – USD Rises, EUR/USD Rises
The US Dollar rises sharply as the sell America trade unwinds following the US–China agreement. The UD has risen to a monthly high after the two sides agreed to temporarily lower tariffs.
The EUR/USD is falling sharply, down 1.3% at the time of writing, marking its steepest selloff so far this year. The EUR is giving back the gains it saw on almost safe haven flows away from the USD as trade tariffs were announced.
GBP/USD is falling amid USD strength and after comments from BoE deputy Governor Clare Lombardelli, who warned that risks to inflation remain. Lomardelli voted to cut rates last week. However, she said wage growth remains too high for inflation to cool to 2%.
Oil Jumps After Trade Talks.
Oil prices jumped 3% on Monday after the US and China said they would reduce some of their tariff measures, raising hopes that the trade war between the world’s two largest consumers of crude oil could soon end.
Positive talks between the world’s two largest economies could help boost the demand outlook as trade between the two is restored. Oil gained over 4% last week after the US trade deal with the UK, which boosted optimism that disruptions from US tariffs may soon be avoided.
Furthermore, talks between Iranian and US negotiators ended on Sunday, and further negotiations are planned to resolve disputes regarding Tehran’s nuclear programme. Any sign of a USU run could deal with concerns over the global oil supply, which may pressure oil prices.