US stock futures rose Sunday, while major Asian markets climbed Monday morning after officials from the United States and China reached a framework for a long awaited trade deal, easing fears of new tariffs and offering a rare moment of optimism for global investors.
As of 6:29 pm ET Sunday, Dow futures were up 0.65%, S&P 500 futures gained 0.74%, and Nasdaq futures rose 0.92%. The boost followed signs that the Federal Reserve could cut interest rates later this week after September inflation came in lower than expected.
Treasury Secretary Scott Bessent described the breakthrough as a “substantial framework” that could avert tariff hikes of up to 157% on Chinese goods, a move that had threatened to escalate the trade dispute between the world’s two largest economies.
The tentative framework comes after months of renewed tension between Washington and Beijing. The conflict intensified when China restricted exports of rare earth minerals materials essential for manufacturing satellites, consumer electronics, and defense systems.
President Donald Trump responded by threatening to impose additional tariffs “over and above” existing duties, potentially doubling rates on hundreds of billions of dollars in Chinese imports. Beijing, in turn, warned of countermeasures, heightening uncertainty across global markets.
Trump and Chinese President Xi Jinping are expected to finalize the agreement when they meet Thursday in South Korea, concluding Trump’s diplomatic tour of Southeast Asia. The White House said the two leaders would discuss trade, technology, and agriculture during their meeting.
“I think we’ve reached a substantial framework for the two leaders who will meet next Thursday … that tariffs will be averted,” Bessent said on ABC’s This Week from Kuala Lumpur. “It’s a step toward stability for both economies.”
Economists say the tentative deal could provide relief to jittery investors after weeks of volatility. “Markets have been hypersensitive to trade headlines, and even a hint of cooperation can move indexes sharply higher,” said Angela Lee, chief Asia strategist at Horizon Capital in Singapore.
“If finalized, this framework could halt the spiral of retaliatory tariffs that have been weighing on both economies.” US markets have already shown signs of recovery.
The Dow Jones Industrial Average closed above 47,000 for the first time Friday, buoyed by the encouraging inflation report. Analysts believe that a mix of trade optimism and the possibility of another Fed rate cut could sustain momentum.
Still, some experts urged caution, noting that details remain scarce. “Until there’s a signed, enforceable agreement, it’s too soon to celebrate,” said Mark Rivera, a trade policy researcher at the Peterson Institute for International Economics.
“Both sides have walked back progress before, and investors know that.” The ongoing trade conflict has rippled through key industries, particularly agriculture and manufacturing.
China was once the largest buyer of US soybeans worth $12.5 billion in 2024 but has not purchased any since May, according to the US Department of Agriculture. Farmers across the Midwest have faced falling crop prices and surging storage costs.
“Soybean prices have been dropping for months,” said David McMillan, a farmer in Iowa. “If this deal goes through and China starts buying again, it could help farmers breathe a little easier.”
Manufacturers have also struggled with rising input costs as supply chains shifted away from China. Some relocated production to Vietnam and Malaysia, but logistics challenges and higher raw material prices have limited gains.
In Asia, optimism spread quickly after the framework announcement. Japan’s Nikkei 225 rose 1.9% in early Monday trading, South Korea’s Kospi jumped 2.4%, and Hong Kong’s Hang Seng index gained 1.28%.
Across Asia, business leaders expressed cautious optimism. “Exporters here have been cutting costs and reducing staff for months,” said Chen Ming, an electronics factory owner in Shenzhen. “If trade stabilizes, we can plan production with more confidence.”
In New York, traders also reacted positively but kept expectations in check. “Markets love good news, but we’ve been here before,” said James Holloway, an analyst at Apex Capital. “It’s encouraging, but until both presidents sign something concrete, the risk remains.”
In Guangzhou, smaller exporters worry that even if tariffs ease, demand may not bounce back immediately. “Many of our US clients shifted orders to Mexico and Vietnam,” said Li Wei, who runs a textile business. “It will take time to rebuild trust.”
The upcoming meeting between Trump and Xi in Seoul is expected to clarify key details, including a possible US deferral on China’s rare-earth export controls.
China currently controls more than 90% of global refined rare earth output a critical leverage point in the trade relationship. Experts say even a limited agreement on this front could significantly benefit US technology and defense industries.
Meanwhile, investors are closely watching the Federal Reserve’s policy meeting later this week, with most expecting another interest rate cut aimed at countering lingering economic headwinds.
The trade framework between the United States and China offers a potential pause in one of the most disruptive economic confrontations in recent years.
While markets welcomed the news, analysts cautioned that optimism could fade quickly without concrete progress.
For now, global investors are betting that cooperation however fragile might hold long enough to steady markets and restore confidence in the world’s two largest economies.