Dow futures jump 300 points on prospects of US-China trade deal, more rate cuts from Fed

US stock futures jumped as trading resumed on Sunday evening local time on prospects of a potential trade deal between the US and China, and on hopes of more monetary easing by the US Federal Reserve starting later this week.

Futures linked to the Dow Jones are up 300 points, while those tied to the S&P 500 and Nasdaq are up 50 points and 220 points respectively.

The surge in futures comes on the back of a positive session last Friday, where the Dow Jones rallied over 400 points to close above 47,000 for the first time, while the S&P 500 closed at a record high. Indices surged after a delayed CPI print, which turned out to be softer-than-expected, and boosted the case for a rate cut by the US Federal Reserve, not just this week, but also in December.

Futures have also surged after news of the US and China reaching a preliminary consensus on a host of issues during the two-day delegation-level talks in Malaysia on the sidelines of the ASEAN summit. The issues range from export controls to fentanyl and shipping levies.

In an interview to CBS News after the talks concluded, US Treasury Secretary Scott Bessent said that the 100% tariff threat made by US President Donald Trump on Chinese exports from November 1, is "effectively off the table", and that he is hopeful of China to make substantial Soybean purchase in the future, as well as delay the export controls for a year for reexamining the same.

The statement comes ahead of a first in-person meeting in six years between Trump and Chinese President Xi Jinping in South Korea on the sidelines of the APAC summit on Thursday, October 30. Bessent believes that an agreement between the two leaders is likely to include a tariff truce, resolution of differences over the sale and use of TikTok, flow of rare earths, and a peace plan enlisting China's help in stopping the Russia-Ukraine war.

A statement from the Chinese trade representative also suggested that both countries have reached a preliminary agreement on Fentanyl, and that they are hopeful of the US either lifting, or reducing the 20% tariff imposed on Chinese exports due to this issue. The Chinese trade representative went on to add that stable economic relations between the US and China are good for both countries, as well as for the world.

This week is a major one not just for the Trump-Xi meet and the Fed outcome, but also for a host of big tech earnings starting Wednesday. Microsoft, Meta, Alphabet, Apple, Amazon, all report earnings across Wednesday and Thursday, along with stocks like Visa, United Health, Eli Lilly, and Mastercard.

The US Dollar index is back at levels of 99 on hopes of a deal between the US and China, while this positive news has triggered some further profit booking in Gold prices as haven demand falls. Brent Crude trades above $66 a barrel mark, while WTI is back at $62 in early Asian trading.