By Mike Murphy
A container ship sails from port in Qingdao, China, on Aug. 12. The trade war between the U.S. and China seems to be back in full swing.
U.S. stock-index futures bounced back strongly Sunday, following Friday’s market plunge after President Donald Trump threatened China with additional 100% tariffs.
Investors were apparently heartened by comments from Trump, who said Sunday in a social-media post: “Don’t worry about China, it will all be fine!”
Dow Jones Industrial Average futures (YM00) jumped 380 points late Sunday, or 0.9%. S&P 500 futures (ES00) rose 1% and Nasdaq-100 futures (NQ00) advanced 1.3%.
Bitcoin (BTCUSD) rallied more than 3% over the weekend and was recently trading around the $115,000 level. Gold (GC00) and silver (SI00) prices rose, while crude futures (CL.1) gained more than 1%.
The latest tensions risk reigniting the trade war between the U.S. and China that has been largely on ice since June, and could derail a possible meeting between Trump and China’s President Xi Jinping.
In a note Sunday, Wedbush analysts called the latest tensions “buying opportunities” for tech stocks.
“We believe the bark will be way worse than bite here,” the Wedbush analysts, led by Daniel Ives, said, expressing confidence that Trump and Xi will eventually meet and the latest tariff threat will be removed.
Also read: Stocks face earnings test with S&P 500 on pace for worst performance in a shutdown since 1990
On Sunday, China’s Commerce Ministry suggested it will not back down from Trump’s latest threats. “We do not want a tariff war but we are not afraid of one,” the ministry said in a statement.
Meanwhile, Vice President J.D. Vance said Trump is open to negotiations with China, if “they’re willing to be reasonable.” While tariff threats have driven many countries to negotiate deals with the U.S. this year, China has yet to buckle under pressure.
Trump later told reporters on Air Force One that he expects an eventual deal with China, saying Nov. 1 is “an eternity” away and that “I think we’re going to be fine with China.”
Trump rattled markets Friday by threatening a “massive increase” of tariffs against Chinese goods, including export controls on critical software, starting Nov. 1 in retaliation for export controls China imposed on rare earths, which are critical for tech manufacturing. China dominates the world’s rare earths supply.
Trump’s threats Friday afternoon amounted to “a policy grenade lobbed into a sleeping market,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note Sunday.
“So we head into Monday blind. The Trump-Xi meeting hangs in the balance, and every macro model splits between two realities,” Innes said. “Come Monday’s open, we’ll find out whether we get Black Monday’s bloodletting or TACO ( Trump always chickens out) Monday’s uneasy digestion.”
On Friday, the Dow DJIA sank 1.9%, while the S&P 500 SPX fell 2.7% – its worst day since the announcement of Trump’s “liberation day” tariffs in April – and the tech-heavy Nasdaq COMP slumped 3.6%.
All three major indexes booked weekly losses, with the Dow down 2.7% for the week, the S&P 500 off 2.4% and the Nasdaq 2.5% lower.
Monday is the Columbus Day/Indigenous Peoples’ Day holiday in the U.S. Stock markets will be open, but bond markets will be closed.
-Mike Murphy
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10-12-25 1815ET
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