Stock futures soar as US agrees to slash Chinese tariffs to 30% for 90 days
Futures tied to the S&P 500 Index (SPY) rose as much as 3% early on Monday morning.
Global markets were jolted into the green early on Monday after a bilateral statement from the United States and China signaled a reprieve in the trade war that has been top of investors’ concerns for much of this year.
Per the statement, the additional levies added by two of President Trump’s executive orders, those numbered 14259 and 14266, are set to be removed, with the earlier order, EO 14257, modified so that the US is “suspending 24 percentage points of that rate for an initial period of 90 days, while retaining the remaining ad valorem rate of 10 percent on those articles pursuant to the terms of said Order.” China is also modifying its rates. The end result of the relevant arithmetic is such that:
US tariffs on Chinese goods will drop to 30%, from 145%.*
Chinese tariffs on US goods will drop to 10%, from 125%.
The announcement resets the trade clock for the world’s two largest economies, giving representatives 90 days to hammer out a more detailed deal.
At the time of writing, the SPDR S&P 500 Trust is up as much as 3%, similar to the rise of Hong Kong’s Hang Seng Index, which closed up 2.98%.
Futures contracts tied to the tech-heavy Nasdaq 100 were even more elevated, rising more than 3.5%, led higher by tech giants like Apple, Nvidia, and Tesla.
European markets were more modestly green, with the STOXX 600 up 0.5%. In early trading in London, the FTSE 100 was broadly flat, with investors pausing buying after a breathless rally that saw the index notch 15 consecutive gains.
*This includes the original 20% levy, introduced by the Trump administration in response to fentanyl.
