S&P 500 Futures, Gold Rally as Tariff Spat Eases: Markets Wrap
(Bloomberg) — US equity-index futures climbed 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. Treasury futures slipped and oil gained 1.5%. Silver hit the highest in decades amid a historic short squeeze in London, while gold set a new peak. Contracts indicated a stronger open for European stocks. Cryptocurrencies stabilized.
Declines in Asian shares, which were closed when Trump made his comments Friday, suggest the markets are pricing in the risk that his tariff threats could materialize. Mainland China stocks fell 1% while Hong Kong had its biggest intraday drop since early April. 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. China also said it won’t hesitate to retaliate, should Washington persist in its measures against Beijing.
“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.”
On Sunday, the 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 hurt 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.
“The history of Trump-Xi negotiations has been marked by cycles of escalation, followed by tactical truces, and the latest development could signal the start of a renewed cycle of escalation,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management. “The path for markets in the near term depends heavily on the path escalation takes.”
Meanwhile, Chinese shipments overseas grew at the fastest in six months, far exceeding forecasts in a sign of resilience that’s giving Beijing a stronger hand in the latest trade war with the US.
Elsewhere, Australia’s dollar led a rebound in risk-sensitive currencies as Trump’s more conciliatory rhetoric toward China boosted investor sentiment and crimped demand for haven assets. Haven assets dropped Monday with both the yen and Swiss franc weakening against the dollar. An Asian currency index fell to the lowest since May.
Markets are seeing “a bit of payback” to Friday’s price action in currencies on hopes of a US-China de-escalation, said Rodrigo Catril, a strategist at National Australia Bank Ltd. in Sydney.
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. advanced in its Mumbai trading debut after the shadow lender wrapped up its 155-billion-rupee ($1.7 billion) initial public offering, India’s biggest this 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 continue to watch for more developments. Some of the main moves in markets:
Stocks
S&P 500 futures rose 1.3% as of 6:42 a.m. London time Nasdaq 100 futures rose 1.8% The MSCI Asia Pacific Index fell 1% Hong Kong’s Hang Seng fell 2.5% The Shanghai Composite fell 0.5% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1619 The Japanese yen fell 0.4% to 151.81 per dollar The offshore yuan rose 0.1% to 7.1357 per dollar The British pound was little changed at $1.3355 Cryptocurrencies
Bitcoin fell 0.2% to $114,757.53 Ether fell 0.2% to $4,134.5 Bonds
Australia’s 10-year yield declined seven basis points to 4.29% Commodities
Spot gold rose 1.5% to $4,077.38 an ounce West Texas Intermediate crude rose 1.5% to $59.78 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi, Ruth Carson, Carmeli Argana and Biyun Song.
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