S&P 500 Futures Jump As China Trade Rhetoric Cools: Markets Wrap
Shares in South Korea and Australia retreated while futures indicated losses for Hong Kong and China.
US equity-index futures climbed and oil rebounded after President Donald Trump signaled an openness to a deal with China, improving sentiment after markets were rattled by a sharp escalation in trade tensions.
Contracts for the S&P 500 and the Nasdaq 100 indexes jumped more than 1% as the administration toned down its rhetoric after Trump threatened tariffs of 100% on China in response to Chinese export controls. Treasury futures dropped and oil rose more than 1% while cryptocurrencies stabilized after a selloff Friday. Silver swung near a record as a historic short squeeze in London and trade tensions roiled the market, while gold set a new peak.
Declines in Asian stocks, which were closed when Trump made his comments Friday, indicate concerns about the durability of the truce. Shares in South Korea and Australia retreated while futures indicated losses for Hong Kong and China. A gauge of Chinese technology companies listed in the US plunged 6.1% Friday, their biggest loss since April. Japan is closed for a holiday.
Big downward moves in risky assets have been a rarity of late, which may itself be a factor in the jarring reaction to trade tensions. Since the tariff-fueled meltdown in April, the S&P 500 has surged on optimism about AI and hopes for Federal Reserve rate cuts. The gauge is trading near one of its highest valuations in 25 years — leaving a thin cushion for bad news.
“It doesn’t look like a replay of April, rather more like a back-and-forth pre-trade negotiation phase before the November deadline of the US-China truce,” said Anna Wu, a cross-asset strategist at Van Eck Associates Corp. “Markets are pricing in to a certain degree of overselling on Friday.”
After China unveiled wide-ranging global export controls on products containing even traces of certain rare earths this past week, Trump fired back by threatening to cancel a planned in-person meeting with Xi Jinping — their first in six years.
Trump then said he would impose an additional 100% tariff on China as well as export controls on “any and all critical software” beginning Nov. 1.
The administration then signaled an openness Sunday to a deal with China with Trump hinting at a possible off-ramp for Xi, while issuing a veiled threat that a full trade war would wound China.
That suggests the US wants to keep up the pressure on China to reverse its most recent trade moves, while trying to reassure spooked markets that a tit-for-tat escalation isn’t inevitable.
China responded saying the US should stop threatening it with higher tariffs and urged further negotiations to resolve outstanding trade issues, adding it will not hesitate to retaliate should Washington persist in its measures against Beijing.
Chinese equities meanwhile have been one of the world’s best performers. Hong Kong’s Hang Seng Index has climbed 31% in 2025 as they benefited from the trade truce with the US in addition to optimism over the country’s growing heft in AI. Alibaba Group Holding Ltd. has surged more than 100%, with Tencent Holdings Ltd. up almost 60%.
“Markets are now debating whether this latest tariff salvo will materialize,” Dilin Wu, a strategist at Pepperstone Group wrote in a note. “If it’s a negotiating ploy, the current pullback may prove a buy-the-dip opportunity. But if tariffs take effect, a fresh wave of volatility and global risk repricing could follow.”
In European news, French President Emmanuel Macron announced a new cabinet Sunday as pressure builds for him and his reappointed prime minister, Sebastien Lecornu, to head off France’s growing political crisis and pass a budget. French bond futures opened lower.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 1.2% as of 9:47 a.m. Tokyo time
Hang Seng futures fell 5%
Australia’s S&P/ASX 200 fell 0.5%
Euro Stoxx 50 futures rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1611
The Japanese yen fell 0.5% to 151.88 per dollar
The offshore yuan rose 0.1% to 7.1371 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $115,261.17
Ether fell 0.2% to $4,134
Bonds
Australia’s 10-year yield declined eight basis points to 4.29%
Commodities
West Texas Intermediate crude rose 1.4% to $59.73 a barrel
Spot gold rose 0.8% to $4,049.91 an ounce
