U.S. equity futures powered higher in early Tuesday trading, as global markets looked to claw back some of the historic losses over the past week, even as investors braced for a trade war showdown between Washington and Beijing.
Stocks ended lower again last night, pegging the S&P 500 at the lowest levels in nearly a year, following a whipsaw session that saw the CBOE Group’s VIX volatility index touch the highest levels in five years.
Tech stocks were also active, with the Nasdaq actually squeezing out a modest 0.1% gain on the session, although the benchmark remains more than 21% south of its mid-December peak following the tariff-lead selling which began last month.
Overnight recoveries in Japan, where the Nikkei 225 surged more than 6% following reports it will begin trade negotiations with the White House, as well as rebounds in China and Hong Kong, are supporting U.S. futures heading into the start of the Tuesday session, but investors remain focused on the escalating rhetoric between Washington and Beijing.
Investors are eyeing developments in a rapidly-accelerating trade war between Washington and Beijing.
President Donald Trump threatened an additional 50% levy on China-made goods yesterday if officials don’t remove a 34% reprisal tariff announced last week, setting a deadline of midnight tonight.
China, for its part, remained unbowed.
“The U.S. side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature,” said China’s commerce ministry. “If the U.S. insists on having its way, China will fight to the end.”
That standoff pairs with a rejection by the White House of an offer from European Union President Ursula von der Leyen to reduce tariffs between it and the United States to zero.
“The European Union has been very bad to us,” President Trump told reporters in Washington “We’re paying them to guard them militarily and they are screwing us on trade, so that’s not a good combination.”
Markets, for the moment at least, are shrugging off the trade negotiation headlines and looking for bargains amid the wreckage of a $10 trillion selloff in global equities over the past week.
On Wall Street, futures contracts tied to the S&P 500 suggest an opening bell gain of around 76 points, with the Dow Jones Industrial Average called 745 points higher from last night’s close.
The tech-focused Nasdaq, meanwhile, is priced for gain of around 203 points, with Nvidia (NVDA) , Tesla (TSLA) and Apple (AAPL) bumping higher in premarket trading.
More Economic Analysis:
Investors are still expecting big swings over the course of the trading session, however, with the VIX index pegged at $42.70, a level that suggests intra-day moves of around 2.67%, or 140 points, for the S&P 500.
Stocks around the world were also in rally-mode, albeit with more modest advances, as Europe’s Stoxx 600 benchmark rose 1.6% in Frankfurt and Britain’s FTSE gained 1.8% in London.
Overnight in Asia, the Nikkei 225 finished 6.03% higher while stocks in Hong Kong rose 1.5% and China’s CSI 300 benchmark gained 1.7% and the yuan fell to its lowest level against the U.S. dollar since September of 2023.
