Wall Street reacts to Trump’s truce with China

Trump adopts a more conciliatory tone on China, and Wall Street reacts with a rise as investors await quarterly results

Wall Street markets were prepared to start the week on a high this Monday, after the pullback recorded last Friday, with investors feeling more confident in the face of the President Donald Trump’s more moderate tone towards China. The move reflects a reduction in concerns about a possible escalation in trade tensions between the world’s two largest economies.

O US Treasury Secretary Scott Bessenthe stated in an interview with Fox Business Network that Trump is expected to soon meet his Chinese counterpart during the meeting in South Korea, as both countries seek ease trade tensions.

Last week, trade relations became complicated after the China expanded controls on rare earth exportsessential for the technology industry. In response, Trump announced on Friday his intention to apply a 100% additional tariff on Chinese products imported into the USin addition to new controls on critical software manufactured in the country. The measure caused significant losses, causing S&P 500 and Nasdaq recorded their biggest weekly declines in monthsinterrupting a streak of gains.

Over the weekend, however, Trump adopted a more conciliatory stance, stating that “everything will be fine” and that the US does not want “to harm” China. Beijing, in turn, held the US responsible for the escalation, but did not implement new retaliatory measurescontributing to an environment of lower tension in the markets.

“The combination of profits, Israel and peace, and the fact that some kind of deal will eventually be reached with China on trade terms, should be a protection for the market,” he commented. Peter Cardillochief economist at Spartan Capital Securities.

Impacts of the international scenario

In addition to trade issues, the Middle East brought positive news: the Hamas handed over the first group of surviving Israeli hostagesmarking a significant advance in the ceasefire in Gazaan initiative promoted by Trump. The event contributed to increasing optimism among investors concerned about geopolitical risks.

To the 8:26 am ETos E-minis indicated a robust opening:

• Dow Jones was advancing 366 points (0.8%)
• S&P 500 rose 74.75 points (1.13%)
• Nasdaq 100 won 419.5 points (1.72%)

Earnings season under watch

Another focus of the market this week is the start of quarterly earnings seasonespecially in the banking sector. JPMorgan Chase, Goldman Sachs, Citigroup e Wells Fargo are expected to release their numbers on Tuesday. The expected profit growth of the S&P 500 in the third trimester is 8.8% compared to last yearin front of 13.8% registered in the previous quarteraccording to data from the LSEG I/B/E/S.

This season will be a crucial test for Wall Streetoffering signals about the real economy at a time of delay in releasing official data due to government shutdownwhich already extends across the 13th consecutive day.

Stocks highlighted in pre-market

In the premarket, the top stocks known as “Magnificent Seven” registered gains after last Friday’s fall:

• Nvidia (NVDA) rose 2,8%
• Tesla (TSLA) advanced 2,5%
• JPMorgan (JPM) it won 1,2%driven by the announcement of a US$1.5 trillion strategic investment plan
• Oracle (ORCL) was discharged from 1,7% after price target increase by two brokers
• Estée Lauder (EL) grew 4,6% with rating update from Goldman Sachs
• Rocket Lab (RKLB) rose 6,8% after Morgan Stanley raised its rating

O optimism surrounding artificial intelligence and expectations of possible interest rate cuts in the US continue to support the market, reinforcing investor confidence after weeks of tension.

This Monday, therefore, Wall Street starts the week in a good mood and signs of recoverywhile operators closely monitor trade negotiations between the US and Chinathe first quarterly results and geopolitical developments in Gaza.

With information from Reuters*