Global financial markets started the week on an optimistic note as signs of progress emerged from the ongoing US-China trade negotiations.
Wall Street stock futures rallied on Monday, while the US dollar strengthened against traditional safe-haven currencies, reflecting growing investor confidence that tensions between the world’s two largest economies may finally ease.
US Treasury Secretary Scott Bessent said that “substantial progress” had been made in the latest round of talks held in Geneva over the weekend.
Chinese officials echoed this sentiment, confirming that both nations had reached an “important consensus” and agreed to establish a new economic dialogue forum aimed at fostering deeper cooperation.
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Although the joint statement expected later today had yet to be released at the time of reporting, it’s noteworthy that neither side explicitly mentioned tariff reductions — a key concern for global markets.
Investors are hopeful that the White House will soon roll back the harsh 145% tariffs currently imposed on Chinese imports.
Even a partial reduction, possibly reverting to the 60% rate initially proposed by President Donald Trump, would be a welcome development. However, Trump has continued to push for broad tariffs, raising concerns that prolonged trade barriers could hurt global growth and drive inflation higher.
The optimism surrounding the Geneva talks gave a strong boost to equities and futures across key markets:
- S&P 500 futures rose 1.4%, while Nasdaq futures climbed 1.9%
- EUROSTOXX 50 futures advanced 0.9%
- FTSE futures added 0.3%, and Germany’s DAX futures rose 0.8%
- Japan’s Nikkei 225 inched up 0.3%
- South Korea’s Kospi gained 0.6%
- China’s blue-chip CSI 300 index added 0.8%, and the yuan strengthened by 0.2%, trading at 7.2243 per dollar
The upward trend comes after markets ended the previous week on a quieter note as traders awaited the outcome of the US-China trade talks. Despite the market optimism, recent economic data from China pointed to ongoing weaknesses in domestic demand.
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Over the weekend, reports showed that factory-gate prices in April fell at their fastest pace in six months, while consumer prices declined for a third consecutive month — underscoring persistent deflationary pressures in the Chinese economy.
The US dollar also gained strength on Monday, climbing nearly 0.5% against the Japanese yen to hit 146.03 — just shy of its five-week high of 146.31. Meanwhile, the euro slipped 0.2% to $1.1224, and the US Dollar Index (DXY) rose 0.2% to 100.60.
As investors recalibrated expectations for US monetary policy, Fed fund futures retreated between 3 and 7 basis points. The probability of a June interest rate cut now stands at just 17%, down sharply from over 60% just a month ago. A rate cut in July, however, is still being priced in with a 59% chance.
The renewed momentum in US-China trade talks has injected fresh optimism into global markets. While investors remain cautious about the lack of specifics on tariffs, the tone from both sides is more constructive than it has been in months. The coming days — and especially the content of the anticipated joint statement — will be critical in shaping the market’s next moves.
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