US officials announced some hours ago a trade deal with China is ready to be concluded, which has sent major equity indices rising sharply higher to new all-time highs.
- Sunday saw US Trade Secretary Bessent announce that China is "ready" to conclude a trade deal, with a draft outline already more or less agreed. The deal will likely be formally concluded this Thursday when Presidents Trump and Xi meet: China will back down on rare earth restrictions and the USA will back down on the new 100% tariff which is currently due to take effect next weekend. The news sent stock markets roaring higher, notably:
- The KOSPI Composite in South Korea gapped higher and rose.
- The Japanese Nikkei 225 also gapped higher and performed very strongly, rising by more than 2% on the day.
- The US NASDAQ 100 Index is now closer to 26,000 than 25,000.
- The US S&P 500 Index has traded above 6,850 with the big round number at 7,000 now in sight.
- The UK FTSE 100 Index looks set to open at a new record high price.
- It is clear that the outlook for stocks is bullish, with this trade deal looming and a Fed rate cut of 0.25% virtually certain to happen later this week. I am very happy to be long of any of these indices, especially the US ones.
- In the Forex market, the Australian Dollar has been the strongest major currency since today's Tokyo open, while the Japanese Yen has been the weakest. The USD/JPY currency pair is in some focus after triggering a long trade entry at most trend-following funds two weeks ago and is looking bullish as long as it holds up above the ¥152.50 area.
- Soybean futures look likely to make a bullish breakout to a new 3-month high price today. This may interest some trend or breakout traders. I personally like to wait for a 6-month high price before buying commodities.
- Bitcoin is rising strongly in line with the general advance by risky assets, but looks as if it may face strong resistance in the $116,000 area, which might also see the formation of a bearish shoulder in a head and shoulders chart pattern.
- There are no high-impact economic data releases scheduled today, so it might be a relatively quiet day in the market, although the huge events anticipated for later this week are more likely to inject above-average volatility into trading.