Mixed market reactions ahead of trade talks
United States (US) equity markets concluded last week on a subdued note as uncertainty loomed ahead of the weekend’s US-China trade discussions. For the week, the US 500 (S&P 500) finished 0.5% lower, the US Tech 100 (Nasdaq) slipped about 0.2%, and the Wall Street (Dow Jones) dropped by 0.2%.
Anticipation ahead of the US-China talks was dampened by President Trump’s comment on Friday night that an 80% tariff on Chinese imports “seems right.” Although it is lower than the existing 145% rate on many Chinese imports, an 80% tariff rate would still result in a 15-20% effective tariff rate on all US imports, posing a significant threat to US growth prospects.
Trade negotiations show positive momentum
Following the first day of talks in Switzerland, President Trump said on social media that negotiators had achieved a “total reset” and “great progress”, indirectly referring to mending the damage inflicted by the White House’s heavy-handed approach to rebalancing global trade.
This has been followed up by reports this morning that, after a second day of negotiations, US-China trade talks achieved “substantial progress” with a commitment to ongoing negotiations and a trade consultation mechanism, but no immediate tariff reductions were confirmed.
The White House, Bessent, and Greer have promised a full briefing later today, outlining the specifics that have been agreed upon. This could include a framework for phased tariff reductions (e.g., from 145% to 80% on the US side, as Trump previously suggested) or exemptions for certain goods, as China reportedly compiled a list of US products to exclude from its 125% tariffs.
Global peace initiatives boost market sentiment
This news, along with India and Pakistan agreeing to a ceasefire and reports that Russian President Putin and the President of Ukraine, Volodymyr Zelensky, will meet this week in Turkey for direct peace talks, has boosted US equity futures on the reopening, with US 500 futures trading 1.16% higher at 5745.
Key economic data and earnings ahead
Looking ahead, attention will focus on the consumer price index (CPI) (previewed below), PPI, Retail Sales and Consumer Sentiment data, and speeches from Federal Reserve (Fed) officials, including Fed Chair Powell. Companies including Cisco, Tencent, Alibaba, Walmart, and Target are set to report their earnings.