Wall St futures edge up after monthly gains; more earnings ahead
Investing.com - A "renewed truce" over trade between the United States and China paves the way for stock markets to power higher on U.S. interest rate easing and strong corporate results, according to analysts at Wolfe Research.
On Thursday, U.S. President Donald Trump described his first in-person talks with Chinese counterpart Xi Jinping in six years as "amazing," saying that the U.S. would immediately bring down levies on Chinese goods. Trump previously threatened to slap additional 100% duties on China earlier this month.
In exchange, Trump said Beijing had pledged to help crack down on the flow of the chemicals used to make the illegal drug fentanyl into the United States, and agreed to pause controls on exports of rare earth minerals -- a sector, crucial for industries like electric vehicles and semiconductors, that China dominates. China agreed to buy "tremendous amounts" of U.S. soybeans and other farm products "starting immediately" as well, Trump said.
The Chinese Commerce Ministry later added that the halt to expanded rare earth restrictions would last for a year, and said both sides had reached a consensus over fentanyl cooperation and agricultural trade.
However, Trump said that there were no discussions about Nvidia’s cutting-edge Blackwell AI chip, even after he suggested in the build-up to the meeting that the topic could come up. Instead, he appeared to indicate that the future of Nvidia’s presence in China, a $50-billion chip market, is ultimately in the company’s hands.
Stock markets on Wall Street seemed to be taking the pronouncements following the 90-minute meeting in South Korea in stride, notching a mixed open, with analysts at Vital Knowledge suggesting that "the deliverables" of the talks didn’t "really alter the status quo" of U.S.-China trade relations "dramatically."
However, regardless of the details, "the most important thing about today’s deal is that it happened," the Wolfe analysts including Tobin Marcus and Chutong Zhu said.
"By far the most important outcome is eliminating the threat of 100% U.S. tariffs and disruptive Chinese export controls on rare earths," they argued in a note. "The aspects of the deal that go beyond this baseline expectation of renewed detente are gravy. Markets just need policy not to get in the way."