TLDR
- MSFT and META reported strong quarterly results, boosting U.S. stock futures
- Trump administration has quietly reached out to Beijing for tariff talks despite public stance
- China quietly compiled a list of US goods exempt from its 125% tariffs to ease tensions
- U.S. cargo shipments from China have dropped 60% due to 145% tariffs
- Trump signed an order offering exemptions to certain car and parts tariffs after industry lobbying
U.S. stock futures rose early Thursday following strong quarterly results from tech giants Meta Platforms and Microsoft. This positive market movement comes as the Trump administration has quietly initiated contact with Beijing regarding tariff discussions, despite ongoing trade tensions between the world’s two largest economies.
Meta stock increased over 5% in after-hours trading after reporting better-than-expected first-quarter revenue. Microsoft shares soared nearly 7% following strong fiscal third-quarter results that beat estimates for both revenue and profit, along with providing an upbeat outlook for investors.
These tech sector gains provided a bright spot in what has been a mixed month for major market indices. While the Nasdaq Composite managed a 0.9% gain in April, both the S&P 500 and Dow Jones ended the month down, falling approximately 0.8% and 3.2% respectively.
U.S.-China Trade Developments
Behind the scenes, the trade relationship between the U.S. and China appears to be showing subtle signs of potential thawing. Reports indicate the Trump administration has reached out to Beijing to initiate tariff talks, contradicting President Trump’s public stance that President Xi must make the first move.
During a Cabinet meeting, Trump stated that falling cargo flows demonstrated China would soon need to engage. He mentioned he was “not happy” with the slowdown but wanted “China to do well” if it treated the U.S. fairly. The President expressed confidence about future communication with Xi, stating, “It’ll happen.”
Chinese response has been measured. A post from Yuyuantantian, a Weibo account connected to China Central Television that often signals Beijing’s trade views, stated China won’t engage unless the U.S. takes “meaningful measures.” The post suggested Washington appears to be the more anxious party under growing pressure.
Reuters reported that China has quietly compiled a list of U.S. goods exempt from its 125% tariffs, aiming to ease trade tensions without making public concessions. The list has been expanding, with recent waivers on U.S. ethane, some semiconductor products, and certain pharmaceuticals.
Impact of Tariff Policies
The effects of the trade tensions are becoming more visible in economic data. With 145% tariffs on Chinese imports in place, cargo shipments have dropped by 60%, raising concerns about supply shortages and potential layoffs in trucking, logistics, and retail sectors.
President Trump has defended the high tariffs, claiming China “deserves it” and would likely absorb the costs. While acknowledging potential supply shortages and higher prices, he downplayed these concerns, saying shelves might have fewer toys and they would cost slightly more.
Some relief is on the way for the auto industry. Trump recently signed an order offering exemptions to certain car and parts tariffs after intense lobbying from automakers who warned of sales impacts and price increases for consumers.
The order clarifies that companies already paying tariffs on imported vehicles won’t be charged additional levies, such as those on steel. The U.S. has also eased duties on foreign parts, representing a compromise after industry warnings about economic impacts.
Looking ahead, investors will focus on upcoming quarterly earnings reports from major companies including Apple, Amazon, CVS Health, Eli Lilly, McDonald’s, and Roblox.
On the economic front, Weekly Jobless Claims data, the U.S. productivity report for Q1, and March’s Wholesale Inventories reading are due later today.
Market indicators showed mixed signals on Thursday. The U.S. 10-year treasury yield was down, floating near 4.15%. WTI crude oil futures were trending lower, hovering near $57.70 per barrel. Gold prices fell below $3,240 per ounce, reaching its lowest level since April 16, as easing trade tensions boosted risk appetite and reduced its demand.
Most European markets were closed Thursday for Labor Day, while the U.K.’s FTSE 100 opened slightly lower as investors remained cautious amid economic uncertainty and weak U.S. data from the previous day.
Asian markets showed strength, with Japanese indices moving higher after the Bank of Japan held interest rates at 0.5%. The Topix and Nikkei indices closed up by 0.46% and 1.13% respectively. Hong Kong and China’s stock markets were closed for Labor Day.
Commerce Secretary Howard Lutnick claimed Tuesday that the U.S. and one unnamed country were on the doorstep of a trade deal, while another official stated the U.S. was “very close” to a deal with India as the administration marked its 100th day in office.
