Stocks Bounce Back as Trump Softens China Rhetoric: Markets Wrap
(Bloomberg) — US stocks are set to recoup some losses from Friday’s selloff after President Donald Trump and senior officials backpedaled on tariff threats against China, signaling a willingness to negotiate. Gold hit a fresh record.
S&P 500 futures bounced 1.1% after the benchmark suffered its biggest drop since April. Contracts for the Nasdaq 100 rallied 1.7%. Treasury futures slipped, with cash trading in US bonds suspended for Columbus Day. The dash for gold persisted as the metal topped $4,080 an ounce.
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In Europe, the yield spread between 10-year French and German bonds held steady as President Emmanuel Macron unveiled a new cabinet to contain a deepening political crisis. Silver surged to its highest level in decades amid a historic short squeeze in London. The dollar edged higher and oil rose for the first time in three days.
Risky assets are rebounding as the Trump administration softened its rhetoric toward China, following threats of an additional 100% tariff on the nation’s goods over recently announced export controls. On Monday, Treasury Secretary Scott Bessent said he still expects that Trump and Xi Jinping will meet, while warning that all options are open for retaliating against China’s move.
“There is a belief emerging that this is mostly negotiating tactics on both sides,” wrote Jim Reid, global head of macro research and thematic strategy at Deutsche Bank AG. “The market will begin to price in a reasonable probability of a deal once the initial shock fades.”
With valuations still stretched after this year’s breathtaking rally, traders are bracing for some volatility as the earnings season approaches amid lingering trade uncertainty. The impact of corporate results may be amplified as official US economic data remain delayed by the government shutdown, clouding visibility on the path for rate cuts.
As JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. prepare to report third-quarter earnings on Tuesday, options on S&P 500 members imply an average 4.7% swing after results, data compiled by Bloomberg show. That’s near July’s level, when the expected move was the largest for an earnings-season kickoff since 2022, using JPMorgan’s release as the starting point.
“For earnings, the focus will remain on the richly-valued areas of the market,” said Geoff Yu, senior macro strategist at BNY. “We’ve seen a more defensive posture take hold and it’s a time for validation and confirmation.”
Morgan Stanley strategist Michael Wilson warned US stocks are at risk of sinking as much as 11% if trade tensions between the US and China aren’t resolved before a November deadline.
“If associated trade uncertainty/volatility continue into early November, we could see a larger correction than most are expecting,” Wilson wrote in a note. He forecast that the S&P 500 could drop to between 6,027 and 5,800 points in a bear-case scenario.
Investors will also keep a close eye on comments from global policymakers and finance ministers at this week’s International Monetary Fund and World Bank autumn meetings. In recent weeks, central bankers have delivered a chorus of warnings that the AI-driven stock rally could be heading for a correction.
Corporate News:
JPMorgan Chase & Co. vowed to funnel $1.5 trillion into industries that bolster US economic security and resiliency over the next 10 years. Brookfield will acquire the remaining parts of distressed-debt specialist Oaktree Capital Management it doesn’t already own. First Brands Group’s little-known Chief Executive Officer Patrick James has resigned from the company. Lloyds Banking Group Plc said it intends to set aside an additional provision of £800 million ($1.07 billion) to compensate customers who were missold car loans. China Vanke Co.’s recently appointed chairman has resigned from the role, in another blow to the embattled developer facing liquidity challenges. Some of the main moves in markets:
Stocks
S&P 500 futures rose 1.1% as of 8:24 a.m. New York time Nasdaq 100 futures rose 1.7% Futures on the Dow Jones Industrial Average rose 0.7% The Stoxx Europe 600 rose 0.2% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.4% to $1.1570 The British pound fell 0.2% to $1.3337 The Japanese yen fell 0.6% to 152.10 per dollar Cryptocurrencies
Bitcoin fell 0.5% to $114,396.04 Ether fell 1% to $4,097.98 Bonds
Germany’s 10-year yield declined two basis points to 2.63% Britain’s 10-year yield declined two basis points to 4.65% Commodities
West Texas Intermediate crude rose 1.2% to $59.63 a barrel Spot gold rose 1.6% to $4,080.87 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani.
©2025 Bloomberg L.P.
