Stay informed with free updates
US stock markets rallied on Monday after Donald Trump appeared to back away from his threat to impose punishing new tariffs on Chinese imports, saying the US wants to “help China, not hurt it!!!”
The S&P 500 index was up 1.2 percent in early trading, partially recovering after Trump triggered a 2.7 percent drop on Friday — the Wall Street benchmark’s biggest single-day selloff since April — by threatening to impose additional 100 percent tariffs on China.
The tech-heavy Nasdaq Composite rose 1.7 percent after falling 3.5 percent in the previous trading session as investors worried the tariff threat could reignite the global trade war that rocked markets earlier this year. Trump also suggested he could cancel a planned summit with President Xi Jinping later this month in response to a package of export controls on rare earths that Beijing unveiled last week.
The moves came after Trump wrote in a post on his Truth Social platform on Sunday: “The highly respected President Xi just had a bad moment. He doesn’t want a depression for his country, and neither do I. The US wants to help China, not harm it!!!”
Monday’s response showed investor optimism that much higher rates can be avoided, analysts said.
“The past 72 hours show that there is still room for a negotiated agreement or for the current situation to be pushed forward,” said Geoffrey Yu, senior strategist at BNY in London.
Markets in Europe, which had seen smaller declines on Friday, also held steady. The Stoxx Europe 600 was 0.2 percent higher mid-afternoon. France’s Cac 40 and Germany’s Dax also rose slightly, while the FTSE 100 was slightly lower.
“This is the kind of dip we’ve been waiting for” as a buy signal, HSBC analysts said. “Fundamentally, little has changed,” they added, citing the time remaining for US-China negotiations and steps already taken by major companies to cut tariffs.
Asian stocks, which had closed before Trump made his threats on Friday, fell sharply on Monday despite Trump’s more dovish tone. Hong Kong’s Hang Seng index fell 1.5 percent, Japan’s Topix fell 1.9 percent and Taiwan’s Taiex lost 1.4 percent. The CSI 300 index on mainland China closed 0.5 percent lower.
“Context matters,” says Arun Sai, senior multi-asset strategist at Pictet. “Investors were already nervous about market valuations and the AI bubble – if we trade at these valuation levels, it’s fair to get a knee-jerk reaction.”
Bum Ki Son, a senior regional economist at Barclays in Singapore, said economies in Asia are “the most exposed to trade and Chinese uncertainties compared to other regions”.
The measures came after Beijing criticized Trump’s plan to impose additional tariffs and threatened new countermeasures on Sunday. “China’s position on tariff wars has been consistent: we don’t want to fight, but we are not afraid to fight,” the Commerce Department said.
The price of gold, often seen as a safe haven, hit a record high of $4,090 a troy ounce, continuing a rally that has seen the price rise more than 50 percent this year.
Additional reporting by Ian Smith in London
