Stock futures rallied sharply on Monday, 12 May 2025, after both the United States and China announced “substantial progress” in their latest round of trade negotiations, sparking renewed optimism across global financial markets.
The positive momentum comes after a weekend of high-level discussions in Geneva, Switzerland, where officials from both sides signalled a willingness to ease trade tensions that have weighed heavily on global growth prospects.
The Dow Jones Industrial Average futures leapt by over 400 points, while S&P 500 and Nasdaq futures climbed 1.2% and 1.6% respectively in early trading. This robust uptick follows a challenging fortnight for equities, with investors previously rattled by the imposition of steep tariffs-145% on Chinese imports by the US and 125% in retaliatory measures from Beijing.
The anticipation of a breakthrough had been building, and the latest developments have provided a much-needed boost to investor sentiment.
US Treasury Secretary Scott Bessent described the talks as “productive,” noting that negotiators had reached a framework for further dialogue and potential tariff relief. Chinese Vice Premier He Lifeng echoed this sentiment, calling the outcome “an important first step” and confirming that both sides agreed to establish a mechanism for ongoing consultation. Despite the absence of specific details or immediate tariff reductions, the conciliatory tone and commitment to continued engagement have been welcomed by market participants.
The surge in futures extended beyond Wall Street, with Asian and European indices also poised for gains. Risk-on sentiment dominated as investors bet that the easing of trade tensions could help avert a global recession and stabilise inflation, which has been exacerbated by the tariff war. Oil prices rose in tandem with equities, while traditional safe-haven assets like gold experienced a decline.
However, analysts urge caution, noting that while the progress is significant, the lack of concrete agreements means volatility may persist. The market will closely watch for further announcements and the release of key US inflation data later in the week, which could provide additional insight into the impact of tariffs on consumer prices.
In summary, the substantial progress reported in US-China trade negotiations has triggered a strong rally in stock futures and lifted global market sentiment.
While uncertainties remain, the commitment to ongoing dialogue and the potential for tariff relief have set the stage for a possible turning point in the protracted trade dispute, offering hope for investors and businesses alike.
