Kate Rooney, Eustance Huang
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As of 6 a.m. ET, Dow Jones Industrial Average futures indicated a positive open of more than 100 points. S&P 500 and Nasdaq futures also pointed to early gains.
Major U.S. indexes tumbled Monday after news that China plans to raise tariffs on $60 billion worth of U.S. imports, beginning on June 1. The list of targeted goods ranges from TV cameras to tequila, and includes a range of agricultural products. Beijing’s move comes after Washington announced last week it would increase tariffs from 10% to 25% on a bulk of Chinese imports.
In a note to clients Monday, Citi said its China economists are “cautiously optimistic that a trade deal can eventually be signed.” But added that the “window to avoid further escalations in US/China tensions is closing fast.”
“Ongoing trade flare-ups may continue to swing the stocks in the near-term, but we think the market may have priced a lot of this in,” Citi said.
According to the Washington Post, the office of the U.S. Trade Representative has already gone ahead with first steps on slapping tariffs on roughly $300 billion of Chinese imports.
In the near-term, J.P. Morgan is preparing clients for the worst. The two sides have made progress and held a number of “constructive conversations” on structural issues and trade imbalances.
“However, the remaining hurdles are critical and difficult,” J.P Morgan said. “With the re-escalation of tariff war risks (and China vowed to retaliate), it is challenging to reach an agreement very soon.”
Stocks doing business in China got hit the hardest. Apple, Intel and Caterpillar have all stumbled more than 10% in the six trading days since Trump’s surprise tweet announcing the higher levies.