Investors reacted positively to initial United States, China trade discussions held over the weekend, driving a sharp rally in U.S. stock futures on Sunday.
While both nations reported progress, no specific details on tariff resolutions were disclosed, leaving markets hopeful but cautious.
Futures for the Dow Jones Industrial Average soared 401 points, or 0.97%, signaling strong investor confidence.
S&P 500 futures climbed 1.15%, and Nasdaq futures outperformed with a 1.45% gain.
However, Dow futures pared some gains after President Donald Trump announced on social media plans to sign an executive order aimed at slashing prescription drug prices by 30% to 80%, raising concerns about potential impacts on pharmaceutical stocks.
The U.S. dollar strengthened, gaining 0.1% against the euro and 0.25% against the yen.
Meanwhile, gold prices, a favored safe-haven asset, dropped 2% to $3,273 per ounce, reflecting reduced demand for havens amid the upbeat market mood.
In bond markets, the 10-year Treasury yield edged up slightly to 4.382%. Energy markets also saw gains, with U.S. oil prices rising 0.57% to $61.37 per barrel and Brent crude increasing 0.49% to $64.22.
Analysts remain cautiously optimistic, noting that while the trade talks signal progress, the absence of concrete tariff agreements could temper the rally.
“I’m happy to report that we’ve made substantial progress between the United States and China in the very important trade talks,” Treasury Secretary Scott Bessent told reporters, adding that a full briefing with more specifics will come on Monday.
US Trade Representative official Jamieson Greer, who took part in negotiations with a Chinese delegation led by Vice Premier He Lifeng, indicated that some form of agreement had been reached.
“Just remember why we’re here in the first place—the United States has a massive $1.2 trillion trade deficit, so the president declared a national emergency and imposed tariffs, and we’re confident that the deal we struck with our Chinese partners will help us to work toward resolving that national emergency,” he said.
Later, China’s representative said the two countries had agreed to establish a consultation mechanism for ongoing discussions on trade and economic issues, noting that progress had already been made in the talks.
While a comprehensive trade deal wasn’t anticipated this weekend, encouraging statements from both the U.S. and China signaled a cooling of trade tensions after President Donald Trump imposed a 145% tariff on Chinese goods and Beijing responded with a 125% duty.
According to Michael Brown, senior research strategist at Pepperstone, the talks have resulted in “a broad framework” that sets the stage for continued negotiations aimed at reaching a more extensive trade agreement.
“Not the worst case outcome that was possible from this weekend’s talks, far from it, but not a concrete deal either,” he wrote in a note.
