U.S.-China Trade Deal Optimism May Lead To Continued Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Monday, with stocks poised to add to the strong gains posted last week.

Optimism about a potential U.S.-China trade deal may generate early buying interest ahead of a highly anticipated meeting between President Donald Trump and his Chinese counterpart Xi Jinping later this week.

Treasury Secretary Scott Bessent met with Chinese officials in Malaysia over the weekend and said he believes the talks have results in a "very successful framework" for Trump and Xi to discuss on Thursday.

Bessent also indicated he expects China to resume its purchases of U.S. soybeans and delay the export controls on rare earths that contributed to the recent increase in tensions.

On his way to Japan, Trump also expressed optimism about reaching a trade deal with China after signing separate trade and mineral agreements with his Malaysian and Cambodian counterparts.

Optimism about the outlook for interest rates may also contribute to early strength on Wall Street ahead of the Federal Reserve's monetary policy announcement this week.

With the Fed widely expected to lower rates by another quarter point when it announces its latest decision on Wednesday, traders are likely to pay close attention to the accompanying for clues about the likelihood of further rate cuts.

CME Group's FedWatch Tool is currently indicating a 96.7 percent chance the Fed will lower rates by a quarter point this week and a 95.8 percent chance of another quarter point rate cut in December.

Stocks moved sharply higher during trading on Friday, extending the upward move seen over the course of Thursday's session. With the continued advance, the major averages all reached new record closing highs.

The major averages pulled back off their best levels going into the end the day but still posted strong gains. The Dow jumped 472.51 points or 1.0 percent to 47,207.12, the Nasdaq surged 263.07 points or 1.2 percent to 23,204.87 and the S&P 500 climbed 53.25 points or 0.8 percent to 6,791.69.

For the week, the S&P 500 shot up by 1.9 percent, while the Dow and the Nasdaq spiked by 2.2 percent and 2.3 percent, respectively.

The rally on Wall Street came following the release of a closely watched report on consumer price inflation that increased confidence the Federal Reserve will continue cutting interest rates in the coming months.

While most U.S. economic data has been postponed indefinitely due to the ongoing government shutdown, the Labor Department released a report showing consumer prices increased by slightly less than expected in the month of September.

The Labor Department said its consumer price index rose by 0.3 percent in September after climbing by 0.4 percent in August. Economists had expected consumer prices to rise by another 0.4 percent.

The report also said the annual rate of growth by consumer prices ticked up to 3.0 percent in September from 2.9 percent in August, although that was slower than the 3.1 percent jump expected by economists.

Excluding food and energy prices, the core consumer price index crept up by 0.2 percent in September after rising by 0.3 percent in August. Core consumer prices were expected to increase by another 0.3 percent.

The Labor Department also said the annual rate of growth by core consumer prices slowed to 3.0 percent in September from 3.1 percent August. Economists had expected the pace of growth to remain unchanged.

"Consumer inflation came in cooler in September, reinforcing expectations that the Fed will cut rates again at next week's policy meeting," said Nationwide Chief Economist Kathy Bostjancic.

She added, "We remain of the view that the Fed will cut the fed fund rate by another 50bps by year-end as the weakening in the labor market outweighs concerns about moderately higher inflation stemming mostly from the tariffs."

Buying interest was also generated in reaction to upbeat earnings news from big-name companies like Ford (F), Procter & Gamble (PG) and Intel (INTC).

Shares of Ford spiked by 12.2 percent after the auto giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

Procter & Gamble also advanced by 0.9 percent after the consumer products giant reported fiscal first quarter results that exceeded expectations.

Meanwhile, shares of Intel pulled back well off their early highs but still rose by 0.3 percent after the semiconductor giant reported better than expected third quarter sales.

Computer hardware stocks extended the rally seen during the previous session, with the NYSE Arca Computer Hardware Index surging by 3.2 percent to a new record closing high.

Substantial strength was also visible among banking stocks, as reflected by the 2.1 percent jump by the KBW Bank Index.

Semiconductor, brokerage and networking stocks also saw considerable strength, while gold stocks bucked the uptrend amid a modest decrease by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are edging down $0.09 to $61.41 a barrel after falling $0.29 to $61.50 a barrel last Friday. Meanwhile, after slipping $7.80 to $4,137.80 an ounce in the previous session, gold futures are tumbling $85.10 to $4,052.70 an ounce.

On the currency front, the U.S. dollar is trading at 152.82 yen versus the 152.85 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1639 compared to last Friday's $1.1625.

Asia

Asian stocks advanced on Monday as softer-than-expected U.S. inflation data raised hopes of Federal Reserve rate cuts and reports suggested that the United States and China were closing in on a trade deal.

Investors are anticipating a potential accord after top negotiators from both sides reported progress on contentious issues ahead of a meeting between Presidents Donald Trump and Xi Jinping later this week.

China's Shanghai Composite Index rallied 1.2 percent to 3,996.94, hitting a new 10-year high following high-level trade talks in Malaysia.

According to U.S. Treasury Secretary Scott Bessent, Washington and Beijing have reached a "very substantial framework" that would prevent the U.S. from imposing 100 percent tariffs on Chinese goods and allow for a deferral of China's rare earths export controls.

Investors also cheered data that showed China's industrial profits soared 21.6 percent in September from a year ago, marking the biggest jump since November 2023.

Hong Kong's Hang Seng Index surged 1.1 percent to 26,433.70, with tech and pharma stocks leading the charge.

Japanese markets soared to a record high on expectations of sizeable spending from the nation's new prime minister.

The Nikkei 225 Index jumped 2.5 percent to 50,512.32, closing above the psychological threshold of 50,000 for the first time. The broader Topix Index settled 1.7 percent higher at 3,325.05.

Chip-related stocks rallied ahead of earnings from the biggest U.S. technology firms, including Apple Inc. and Microsoft Corp. SoftBank Group, Advantest and Fujikura surged 7-8 percent.

Seoul stocks reached a new high as technology stocks surged amid hopes for a comprehensive U.S.-China trade deal. The Kospi rallied 2.6 percent to 4,042.83, surpassing the 4,000 mark for the first time.

Market bellwether Samsung Electronics rose 3.2 percent to 102,000 won, closing above 100,000 won per share for the first time. Chip rival SK Hynix jumped 4.9 percent.

Australian markets ended modestly higher, with miners, financials and technology stocks pacing the gainers on easing Sino-U.S. trade tensions.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 9,055.60, while the broader All Ordinaries index closed 0.4 percent higher at 9,351.90.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index edged up by 0.1 percent to 13,391.59.

Europe

European stocks have hovered near record levels on Monday, driven by optimism about easing U.S.-China trade tensions.

Traders also looked ahead to a busy week of central bank announcements that includes rate decisions from the Federal Reserve, the European Central Bank and the Bank of Japan.

The U.S. central bank is widely expected to cut rates by 25 basis points, while the ECB and BOJ are expected to leave rates unchanged.

On the earnings front, mega technology companies, including Apple Inc. and Microsoft Corp., will be unveiling their earnings results this week.

While the U.K.'s FTSE 100 Index is up by 0.1 percent, the German DAX Index is just below the unchanged line and the French CAC 40 Index is down by 0.1 percent.

Porsche shares have rallied even as profits at the German carmaker plunged by nearly 96 percent in the first nine months of 2025 due to heavy costs related with scaling back its electric-vehicle strategy and declining sales in China.

Meanwhile, Swiss drugmaker Novartis has moved to the downside after it agreed to buy Avidity Biosciences for $12 billion in cash.

London-headquartered lender HSBC Holdings has also fallen after announcing a $1.1 billion provision for a Madoff lawsuit appeal loss in its third-quarter results.

U.S. Economic News

The Treasury Department is scheduled to announce the results of this month's auction of $69 billion worth of two-year notes at 11:30 am ET.

At 1 pm ET, the Treasury Department is due to announce the results of this month's auction of $70 billion worth of five-year notes.