Another crazy Monday? Global stock markets show signs of a significant rally following positive news from China and the US

China and the US held high-level economic and trade talks in Geneva, Switzerland, over the weekend. According to He Lifeng, the Chinese lead negotiator and Vice Premier of the State Council, on the evening of the 11th, the talks were frank, in-depth, and constructive, with important consensus reached and substantive progress made.

US Treasury Secretary Scott Bessent also stated that substantial progress had been made in trade negotiations with China. Both sides' statements are undoubtedly crucial for easing international trade disputes and have ignited market optimism about getting back on track.

On Monday, Wall Street stock index futures all rose. As of press time, S&P 500 index futures were up 1.35%, Dow Jones futures contracts were up 1.05%, and Nasdaq index futures were up 1.83%.

Asian stock markets also showed signs of warming up. The Nikkei 225 index opened up 0.53%, the South Korean KOSPI index was up 0.7%, the FTSE China A50 index futures opened higher after a 0.04% decline in the night session of the previous trading day, the Hang Seng index rose more than 1%, and the three major A-share indices all opened sharply higher, with the ChiNext index up 1.4%.

The US dollar also strengthened against safe-haven currencies in the Asian morning session. As of press time, the US dollar index had risen by 0.21%. The US dollar-Japanese yen exchange rate was up 0.42%, and the euro-US dollar exchange rate was down 0.11%.

Inflationary Effects

Michael Brown, Senior Research Strategist at Pepperstone, said that China and the US now seem to have a broad negotiating framework under which the two countries may conduct further negotiations with the aim of reaching a broader trade agreement. This is much better than the worst-case scenario expected by the market.

Chris Weston, Head of Research at Pepperstone, pointed out that early signs in interbank foreign exchange trading favored US dollar bulls, especially against the Swiss franc, yen, and euro. The market will greet the US core CPI and retail sales data against the backdrop of a stronger US dollar.

Although both China and the US have adopted positive attitudes, some analysts believe that Trump's erratic trade stance means he is unlikely to abandon tariffs, and the specific impact of tariffs will be initially reflected in the April consumer price data to be released this week.

US retail sales in April may see a pullback, but analysts at ANZ expect that the market will not see widespread evidence of tariffs showing up in inflation data until the May CPI data is released.

However, Monday's US stock market performance was almost crystal clear to many investors. Dave Portnoy, the billionaire founder of Barstool, posted that the stock market would turn into a movie on Monday. He also included three rocket emojis, predicting a rising market.

Portnoy strongly supported Trump during the 2024 election, but later joined the ranks of those criticizing Trump over tariff issues. He once stated that due to Trump's tariff decisions, his net worth had decreased by 20%.