By Suzanne McGee
(Reuters) -Investors welcomed the conciliatory tone at U.S.-China trade talks this weekend aimed at cooling a trade war between the world’s two largest economies and dispelling some of the uncertainty clouding financial markets, though few expect a major breakthrough just yet.
In a sign of investor relief that the worst of a U.S.-China trade war might be averted, U.S. stock futures rose on Sunday evening. The S&P 500 E-minis rose 1.3%, while Nasdaq futures added 1.6%.
Both sides declined to elaborate on negotiations, saying that further details will be released on Monday, though U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer on Sunday said a deal had been reached with China to cut the U.S. trade deficit.
Chinese Vice Premier He Lifeng, who met his U.S. counterparts in Geneva, described the meeting as “candid” and an important first step.
“This is a step in the right direction, showing that both sides are interested in coming to a constructive conclusion and develop a better trade relationship,” said Eric Kuby, the chief investment officer at North Star Investment Management Corp in Chicago.
“The details are quite sketchy, but I think the direction sounds to be more cooperative rather than combative, and I think that we have to view that as a positive.”
The meeting in Switzerland could mark one of the biggest developments since U.S. President Donald Trump launched sweeping tariffs on April 2, which threw the global trade landscape into chaos and set off extreme market volatility.
Recently, investors have expressed optimism that the worst-case trade scenarios would not come to pass, and pointed to signs of de-escalation between the U.S. and China as a reason behind a rebound in equities.
“Markets may be encouraged by some agreement on a deal, but it will remain contingent on further details being released,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.
“Recent price action suggests some optimism around a trade deal. If that turns out to be the case, pricing will have been justified. The risk is if the deal is less substantial than expected. Then the market might come away disappointed.”
Indeed, despite comments by President Donald Trump ahead of the talks suggesting a lower level of Chinese tariffs and a trade deal announced on Thursday between the U.S. and Britain, many market participants said they were not expecting major breakthroughs.
“I’m not sure I would hit the ‘buy’ button on what we have heard today, but if we can make substantive progress with China I think the market will like it,” said Jack Ablin, founding partner and chief investment officer at Cresset Capital in Chicago.
