(Reuters) – U.S. stock index futures jumped around 2 percent on Monday, setting Wall Street up to add to last week’s strong gains, after the United States and China declared a temporary trade truce.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 30, 2018. REUTERS/Brendan McDermid
Strong gains in Apple Inc (AAPL.O) and other technology stocks pushed Nasdaq futures NQc1 up more than 2 percent, while S&P 500 e-minis ESc1 touched a near 1-month high. Gains in Dow futures set the blue-chip index up for a near 450-point gain at the open.
Washington and Beijing agreed to a 90-day trade ceasefire during the G20 summit in Argentina on Saturday and U.S. President Donald Trump said China has agreed to “reduce and remove” tariffs below the 40 percent level that the country is currently charging on U.S.-made vehicles.
However, the White House also said that the existing 10 percent tariffs on $200 billion worth of Chinese goods would be lifted to 25 percent if no deal was reached within 90 days.
The trade optimism spilt over to shares of Apple, which gained 3.3 percent in premarket trading.
Trump had said last week that the next round of tariffs could also be placed on the company’s iPhones, as part of the $267 billion list of goods not yet hit by tariffs.
Trade-sensitive Caterpillar Inc (CAT.N), Boeing Co (BA.N) gained over 4.5 percent each, while U.S. carmakers General Motors Co (GM.N), Ford Motor Co (F.N) and Tesla Inc (TSLA.O) rose between 3 percent and 4 percent.
“Most of us were hoping that we would come out of these discussions with no new tariffs and a pause, which is ultimately what we got,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
At 8:30 a.m. ET, Dow e-minis 1YMc1 were up about 2 percent, while the S&P 500 e-minis ESc1 were up 40.25 points and Nasdaq 100 e-minis NQc1 were up more than 2 percent.
After being hammered for much of the past two months, Wall Street posted its biggest weekly gain last week in nearly seven years on hopes that a detente could be reached over trade between the world’s top two economies. Futures also added to gains from Sunday.
“Sectors like technology have been beaten up quite a bit due to their international exposure, since today we are in ‘up’ mode, we will see investors looking to get back into these names,” said Frederick.
The Institute for Supply Management (ISM) report, due at 10 a.m. ET (1500 GMT), is expected to show its index of national factory activity fell to 57.6 last month from 57.7 in October.
Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta