US Stock Futures Soar as Trade Tensions Thaw
US stock futures recovered from the market rout on Friday, October 10, as fears of a full-blown US-China trade war eased.
China reacted to Trump’s 100% tariff announcement from Friday by providing greater clarity on its plans for rare earth exports. CN Wire reported:
“China’s Commerce Ministry clarifies rare earth curbs are ‘not a ban,’ says it will approve compliant export applications for civilian use and may offer licensing exemptions.”
Beijing also warned of retaliatory measures if the US follows through on its threat of a 100% tariff.
According to CN Wire:
“China slams threatened U.S. 100% tariffs as a ‘double standard,’ accusing Washington of abusing its own expansive export control lists and damaging the global supply chain. China warns it is prepared to fight a tariff war if necessary, stating “we don’t want one, but we are not afraid of one,” urging the U.S. to reverse its course.”
Beijing also highlighted Washington’s recent addition of Chinese firms to sanction lists and the continuation of Section 301 measures, straining the negotiation atmosphere.
Overnight, US President Trump responded to Beijing and cooled fears of a full-blown trade war, stating:
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The USA wants to help China, not hurt it!!!”
WTI crude oil soared 3.19% to $59.44 in morning trading, partially reversing Friday’s 5.32% plunge to $57.70. A full-blown US-China trade war could weigh heavily on global trade flows and demand for commodities such as oil.
The weekend de-escalation came ahead of the highly anticipated APEC Summit, where President Trump is expected to meet President Xi. Markets are hoping for a trade deal from the meeting.
China Exports Rebound as Trade Tensions Abate
While easing US-China trade tensions lifted sentiment, China’s economy faced early scrutiny in the Monday session. Chinese Exports soared 8.3% year-on-year in September, after rising just 4.4% in August. Meanwhile, imports surged 7.4%, up sharply from 1.3% in August, signaling strong demand.
September’s data came ahead of this month’s APEC Summit, where traders expect President Trump and President Xi to ink a trade deal.
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See all Dow Jones forecastsHow Are US Stock Futures Reacting to Trade Developments?
US stock futures rallied in morning trading on Monday, October 13, partially reversing Friday’s losses. The Dow Jones E-mini climbed 411 points, the Nasdaq 100 E-mini gained 423 points, and the S&P 500 E-mini advanced 84 points.
Later on Monday, Fed speakers could influence demand for US stock futures. Expectations of October and December Fed rate cuts sent US stock futures to early October record highs. Stronger Fed support for aggressive monetary policy easing would likely boost demand for risk assets.
On the other hand, Fed concerns about sticky inflation could signal a less dovish Fed rate path, weighing on sentiment.
The Nasdaq 100 E-mini and the S&P 500 E-mini will likely be more sensitive to Fed chatter. This is because of the influence of borrowing costs on earnings for capital-intensive companies.
Meanwhile, traders should closely monitor Capitol Hill, since the government shutdown has extended to 13 days.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
Following the morning rallies, US stock futures traded above the 50-day and 200-day Exponential Moving Averages (EMAs), reaffirming bullish momentum.
However, the near-term outlook hinges on US-China trade developments, the Senate impasse, and Fed commentary. Key levels traders should monitor include:
Dow Jones
- Resistance: 46,500, 47,000, the October 3 record high of 47,323.
- Support: 46,000, the 50-day EMA (45,801).
Nasdaq 100
- Resistance: 25,000, October 9 record high of 25,394, 25,500.
- Support: 24,500, the 50-day EMA (24,193).
S&P 500
- Resistance: October 9 record high of 6,812, 7,000.
- Support: 6,600, the 50-day EMA (6,575).
October Market Outlook: China, Capitol Hill, and the Fed in Focus
US stock futures could face another bout of volatility after the trade developments, the Senate impasse, and uncertainty about the Fed rate path.
Growing support for October and December Fed rate cuts could send US futures toward their all-time highs. However, rising stagflation risks and Fed calls to delay rate cuts could trigger another market sell-off.
Developments in US-China trade and the US government shutdown will also influence risk sentiment.
Follow our live coverage and consult the economic calendar for real-time market updates.