US futures soar as US and China agree to lower tariffs

US stock futures surged on Monday, with S&P 500 contracts climbing 2.8%, Nasdaq 100 futures rising 3.6%, and Dow Jones futures jumping more than 900 points, as markets cheered the announcement of a sweeping 90-day reduction in tariffs between the US and China following high-level trade negotiations over the weekend in Switzerland.

US futures soar as US and China agree to lower tariffs

Under the deal, the US will slash tariffs on Chinese goods from 145% to 30%, while China will reciprocate by cutting levies on US imports from 125% to 10%, both measures applying for a 90-day grace period. This agreement, described as a temporary "cooling-off phase," significantly boosted investor confidence, signaling that both sides are serious about de-escalating the ongoing trade war, which has rattled global markets and disrupted supply chains for months. The rally comes on the heels of a lackluster week on Wall Street, during which the S&P 500 fell 0.7%, the Nasdaq dropped 0.6%, and the Dow slipped roughly 0.2%, reflecting investor unease over persistent inflation, slowing corporate earnings, and trade-related uncertainty. Monday's pre-market surge saw broad-based gains, with technology, semiconductors, and industrials leading the way as traders bet on improved trade flows and a rebound in global demand. Shares of companies heavily exposed to China, including Apple, Tesla, and Caterpillar, saw significant gains in pre-market trading, while semiconductor stocks soared on expectations of resumed chip exports to Chinese manufacturers.

Eyes on upcoming US data

Looking ahead, market focus will pivot to key economic data releases this week, including the consumer price index (CPI) and producer price index (PPI), which are expected to shed light on the tariff war’s recent impact on US inflationary pressures. Retail sales and industrial production data will also be closely watched for signs of resilience in domestic consumption and manufacturing amid the easing of trade tensions. Additionally, investors will parse commentary from Federal Reserve officials for clues on how the central bank is balancing the conflicting signals of cooling inflation and slowing growth with the evolving trade backdrop. Despite the rally, analysts warn that volatility could remain elevated as the 90-day tariff truce is seen largely as a temporary reprieve rather than a comprehensive resolution, with lingering skepticism over the potential for a broader, binding trade agreement. Market sentiment will likely remain sensitive to any fresh headlines or setbacks in the fragile US-China dialogue, while geopolitical developments and corporate earnings updates could further sway investor risk appetite.