US Stock futures increased on Sunday night after the United States and China agreed to hold back on adding value to their products in an attempt to resume trade negotiations.
The Dow Jones Industrial Average futures traded 224 points higher, which meant a gain of 219 points on Monday's open. S & P 500 and Nasdaq 100 futures also increased sharply, which meant gains of 0.8% and 1.3% respectively.
"The markets seem to be satisfied with the collaboration that comes out of the meetings. For me, it felt like the counter-war was on upward meetings," said Dan Deming, CEO of KKM Financial. "There was a lot of bearishness in the sentiment that was coming into the meeting. Many market observers discounted any change in the story, causing many to believe that the risk was a drawback."
They win Prime Wall Street to start the second Half of the year with a blow after a big first half. S & P 500 rallied more than 1
This wave came after the shares were restored in June from a dry May performance. The Dow increased by 7.2% in June, the biggest gain for that month since 1938. The S & P 500, meanwhile, jumped 7.9% for the month and marked its best June performance since 1955.
President Donald Trump and Chinese President Xi Jinping agreed not to impose new charges on US and Chinese goods after the meeting at the Osaka G20 in Japan on Saturday.
Trump said the meeting went as well as it could have, and noted, "We're right back on track." Xinhua said the two leaders agreed to "resume trade relations between their countries on the basis of equality and mutual respect."
Trump added to the United States will ease restrictions on US companies from selling products to Huawei, a giant China telecommunications company. The United States prevented the companies from selling to Huawei in May, referring to national security issues. The US president also said China would "buy farm produce."
Conversely, the Huawei ban could increase the chipmaker's shares like Skyworks Solutions, Qorvo and Micron Technology, all of which have Huawei's revenue exposure. Skyworks and Micron were both down at least 10% in 2019 through Friday's proximity. Qorvo was down to 16.9% so far.
Investors eagerly awaited the meeting between Trump and Xi as they were looking for the world's major economies to resume trade negotiations or prolong the conflict.
Chetan Ahya, global economy head of Morgan Stanley, described the outcome of the meeting as "an uncertain break."
There is no immediate escalation, but still no clear path towards a comprehensive agreement, Ahya said in a note Sunday. "As it stands, we lack clarity as to whether real progress was being made on the points of punctuality that led to the debates breaking down in the first place. Therefore, our overall conclusion is that developments over the weekend do not do enough to eliminate the uncertainty that arises from trading tensions." 19659002] Comments from Larry Kudlow, director of the National Economic Council, added uncertainty about the US-China trade relations. Kudlow told Fox News on Sunday that Trump did not give Huawei's "general amnesty". He also said there was no timetable for when an agreement could be terminated.
The slow uncertainty about trade relations between the US and China will continue to dampen the outlook for corporate earnings, says Larry McDonald, editor of The Bear Traps Report.
"There is a significant degradation factor that develops within the S & P 500's earnings picture," McDonald said. "Finance director can't make decisions with innocence innocence, infinite … hanging over the market. The equity rate is a screaming sale."
Second quarter calendar for S & P 500 is expected to fall over a year year, according to FactSet data. Analysts also lowered the third-quarter earnings to show a decline from the previous year, as earnings expectations for multinational companies exposed to China have provided.
China and the United States have been involved in a trade crisis for more than a year. At that time, the US has been charging over 250 billion Chinese imports. China has retaliated with its own taxes on American products.
CNBCs Michael Bloom and Everett Rosenfeld contributed to this report.
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