U.S. Stocks May See Continued Strength On U.S.-China Trade Deal Optimism

(RTTNews) - After turning in a strong performance last week, stocks are likely to see further upside in early trading on Monday. The major index futures are currently pointing to a notably higher open for the markets, with the S&P 500 futures up by 0.8 percent.

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.

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Monday. Japan's Nikkei 225 Index surged by 2.5 percent, while China's Shanghai Composite Index jumped by 1.2 percent.

Meanwhile, the major European markets are narrowly mixed. 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.

In commodities trading, 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.