S&P 500 Futures Jump as China Trade Rhetoric Cools: Markets Wrap
(Bloomberg) — 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.
Contracts for the S&P 500 rose 1.3% and those for the Nasdaq 100 jumped 1.8% as the administration toned down its rhetoric after Trump threatened tariffs of 100% on China in response to Chinese export controls. The 10-year US Treasury futures contract opened higher and oil rose 1.7%. Silver swung near a record as a historic short squeeze in London and trade tensions roiled the market, while gold set a new peak. Cryptocurrencies stabilized.
Declines in Asian shares, which were closed when Trump made his comments Friday, indicate concerns about the durability of the truce. Benchmark gauges in China and Hong Kong opened lower by more than 2%, before paring losses. Japan is closed for a holiday, with no cash trading in Treasuries.
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 interest-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.”
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 said he would impose an additional 100% tariff on China as well as export controls on “any and all critical software” beginning Nov. 1.
China responded, saying the US should stop threatening it with higher tariffs and urged further negotiations to resolve outstanding trade issues, adding it will not hesitate to retaliate should Washington persist in its measures against Beijing.
On Sunday, the Trump administration signaled an openness 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.
“Markets are now debating whether this latest tariff salvo will materialize,” Dilin Wu, a strategist at Pepperstone Group wrote in a note. “If it’s a negotiating ploy, the current pullback may prove a buy-the-dip opportunity. But if tariffs take effect, a fresh wave of volatility and global risk repricing could follow.”
Elsewhere, the risk-sensitive Australian dollar rose after Trump tempered an escalation in trade tensions. The yen weakened on Monday after political uncertainty hit Japan as the country’s governing coalition abruptly collapsed on Friday in a major blow to new ruling party leader Sanae Takaichi.
It’s “a reminder that when trouble hits the road, the Aussie dollar’s risk sensitivity makes it the whipping boy asset of choice,” said Rodrigo Catril, strategist at National Australia Bank. The Aussie’s moves against the yen have been “amplified by political uncertainty in Japan.”
In European news, French President Emmanuel Macron announced a new cabinet Sunday as pressure builds for him and his reappointed prime minister, Sebastien Lecornu, to head off France’s growing political crisis and pass a budget. French bond futures opened lower.
Corporate News:
China Vanke Co.’s recently appointed chairman has resigned from the role, in another blow to the embattled developer facing liquidity challenges. Shares in Treasury Wine Estates Ltd. dropped to a 10-year low after the Australian vintner scrapped its earnings guidance for the 2026 financial year and paused a planned share buy-back due to uncertain outlooks in two of its major markets. Tata Capital Ltd. is poised to start trading in Mumbai after the shadow lender wrapped up India’s biggest initial public offering of the year. China’s Sany Heavy Industry Co. is starting to gauge investor interest in its Hong Kong listing, according to the deal’s terms. Shares of Australian and Chinese companies linked to rare earths — critical minerals that are at the center of the Sino-American trade spat — climbed on Monday as investors continued to watch for more developments. Some of the main moves in markets:
Stocks
S&P 500 futures rose 1.3% as of 11:43 a.m. Tokyo time Australia’s S&P/ASX 200 fell 0.5% Hong Kong’s Hang Seng fell 1.9% The Shanghai Composite fell 0.8% Euro Stoxx 50 futures rose 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1620 The Japanese yen fell 0.5% to 151.96 per dollar The offshore yuan rose 0.2% to 7.1344 per dollar Cryptocurrencies
Bitcoin rose 0.4% to $115,433.76 Ether rose 0.6% to $4,164.19 Bonds
Australia’s 10-year yield declined six basis points to 4.30% Commodities
West Texas Intermediate crude rose 1.7% to $59.92 a barrel Spot gold rose 0.8% to $4,048.62 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi, Shikhar Balwani, Ruth Carson and Matthew Burgess.
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