Stock futures on Wall Street rose and the dollar strengthened against safe-haven currencies on Monday, fueled by indications of progress in U.S.-China trade negotiations that raised hopes of averting a global recession. While details were sparse, the ceasefire between India and Pakistan and plans for talks between Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin in Turkey added to the positive sentiment.
In Geneva, U.S. Treasury Secretary Scott Bessent highlighted significant advancements in trade discussions, while Chinese officials spoke of an “important consensus” and agreed to launch a new economic dialogue forum. Although a joint statement was anticipated later in the day, neither side mentioned specific tariff rates.
Market analyst Michael Brown noted that the developments signaled a framework for further negotiations between the two nations with the goal of reaching a comprehensive trade agreement. Investors are optimistic that the White House may consider reducing the 145% tariff on Chinese goods, despite President Donald Trump’s preference for maintaining broad tariffs. The potential trade progress is seen as a means to avoid a severe economic downturn.
As a result, S&P 500 futures climbed 1.2%, Nasdaq futures rose 1.4%, and European market futures also saw gains. Asian markets responded positively, with Japan’s Nikkei edging up and Chinese blue chips firming. The dollar strengthened against the yen and euro, while also showing resilience against the Chinese yuan.
Analysts are closely watching upcoming U.S. data on consumer prices and retail sales for insights into the impact of tariffs on inflation. Despite market expectations for a potential rate cut by the Federal Reserve, some believe it may be premature until the effects of higher tariffs are more evident. Overall, the outlook for easing has been tempered, with Fed fund futures indicating reduced expectations for rate cuts in the near term.
The likelihood of a rate cut in June has dropped to 17%, down from over 60% a month ago, while the possibility of a move in July stands at 59%. This week, several Fed officials will be speaking, with Chair Jerome Powell scheduled to speak on Thursday. The rise in risk appetite has negatively impacted gold, which had been performing well in recent weeks as investors sought safety in the precious metal. Gold prices fell by 1.7% to $3,268 per ounce, shy of the record high of $3,500 in April. Conversely, oil prices moved upward on optimism surrounding progress in trade talks that could mitigate the risk of a significant economic downturn, although the potential increase in supply by OPEC+ remains a challenge. Brent crude increased by 29 cents to $64.20 a barrel, while U.S. crude rose by 30 cents to $61.32 per barrel. [Reporting by Wayne Cole; Editing by Sam Holmes and Shri Navaratnam]
