U.S. equity futures are signaling a sharply lower open on Tuesday, suggesting that stocks may give back some of the strong gains posted in the previous session as fresh trade concerns between Washington and Beijing weigh on sentiment.
The renewed caution comes just a day after a more conciliatory message from President Donald Trump helped spark a rebound in the markets.
Speaking on China’s decision to expand export controls on rare earth minerals, a spokesperson for the Chinese Ministry of Commerce said the move was a response to restrictions previously imposed by the U.S.
“The US has long overstated national security, abused export controls, and adopted discriminatory practices against China”, the spokesperson said, according to Google Translate.
They continued, “In particular, since the Madrid trade talks between China and the U.S., the U.S. has continued to impose a series of new restrictive measures on China, which have seriously harmed China’s interests and seriously undermined the atmosphere of the bilateral trade talks”.
The spokesperson reiterated that Beijing is ready to “fight to the end” if a trade war escalates but emphasized that the “door is open” to dialogue.
Adding to tensions, China announced sanctions against five U.S.-based subsidiaries of South Korean shipping group Hanwha Ocean, accusing the company of cooperating with Washington’s measures targeting China’s maritime sector.
On Monday, stocks staged an impressive comeback. After a strong start, major indexes remained near their highs throughout the session, recovering a portion of Friday’s steep losses.
The Nasdaq surged 490.18 points, or 2.2%, to 22,694.61. The S&P 500 climbed 102.21 points, or 1.6%, to 6,654.72, and the Dow rose 587.98 points, or 1.3%, to 46,067.58.
The bounce came as investors stepped in to buy after last week’s selloff, which sent the major averages to their lowest close in a month. The sharp drop was driven by fears of an escalating trade conflict after Trump threatened a “massive increase” in tariffs on Chinese imports in retaliation for Beijing’s rare earth export controls.
Over the weekend, Trump sought to ease concerns through a post on Truth Social: «Don’t worry about China, it will all be fine!» he wrote. “Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!”
The rally also came during a quiet stretch on the economic calendar, which is expected to remain light due to the ongoing U.S. government shutdown.
The Bureau of Labor Statistics said the September consumer price inflation report, initially scheduled for Wednesday, will be released on Friday, October 24. The agency emphasized that the CPI data is essential for the Social Security Administration to meet statutory deadlines for timely benefits payments.
Tech and semiconductor names were among Monday’s best performers. The Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index both surged 4.9% after being hit hard in Friday’s selloff.
Gold miners also rallied as the precious metal jumped to a record high, pushing the NYSE Arca Gold Bugs Index up 4.7%.
Buying momentum extended across other sectors as well, with steel, oil service, networking, and airline stocks seeing solid gains to start the week.
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