Dow Futures rise after China and the U.S. drop tariffs significantly. The pact supports hopes of a truce in the trade war between the world’s two largest economies, which has jeopardized global growth. Pharmaceutical stocks fall as President Donald Trump says he will sign an executive order to lower prescription prices. Investors are also watching U.S. inflation statistics this week. U.S. stock futures rose on Monday as the U.S. and China agreed to significantly lower their sweeping tariffs. Dow Futures rose 785 points, S&P 500 futures 142 points, and Nasdaq 100 futures 689 points, or 3.4%.
Before key trade discussions in Switzerland between U.S. and Chinese officials, Wall Street indexes were largely flat on Friday. The week ended slightly lower for indexes. After high-stakes trade talks over the weekend, the U.S. and China agreed to a 90-day truce in rising tariffs, Washington dropped tariffs on China to 30%, while Beijing cut levies on U.S. imports to 10%.
Trump had hiked duties on China to at least 145% before the negotiations, prompting Beijing to levy 125% on American imports. “The consensus from both delegations is that neither side wanted a decoupling,” Treasury Secretary Scott Bessent told a news conference. Both sides may hold working-level meetings on economic and trade matters and negotiate more trade. Investors, who feared a global trade war that would destabilize the economy and heighten business uncertainty, welcomed the adjustments.
U.S. consumer prices will be released this week, which may reveal the effects of trade tensions. The April Department of Labor consumer price index is expected to match March’s 2.4%. Recent consumer polls suggest that households are ready for higher prices in the months ahead, while many economists worry that Trump’s tariffs could spark inflation.
Trump imposed harsh tariffs on several countries this month, claiming they were needed to address trade imbalances, boost government income, and reshore manufacturing jobs. After stock and bond market turmoil, Trump partially postponed most of these levies.
Pharmaceutical stocks fell Monday as Trump revealed plans to sign an executive order to lower US prescription drug prices by 30%–80%. Like numerous Asian peers, Novo Nordisk, AstraZeneca, GSK, and Roche fell in Europe. Trump tweeted on Sunday that “most favored nation” pricing will match U.S. medicine prices with other high-income nations. This might hurt European and Asian drugmakers that depend on the U.S. market, where customers pay over three times more for many prescription pharmaceuticals than in other wealthy nations.
After a China-U.S. trade pact fueled expectations that the world’s two major crude users may resolve their conflict, oil prices jumped Monday, building on last week’s significant gains. Brent futures jumped 2.5% to $65.52 while WTI futures rose 2.6% to $62.62. Both contracts climbed more than 4% last week on hopes of a Trump tariff deescalation. U.S. dollar and Chinese yuan strengthened elsewhere. Trade discussions may have lowered gold prices, indicating that the classic safe-haven asset had lost its shine.