Are China-US Meetings Occurring, Or Are They But A Dream? – Europe Market Wrap

US stock futures turned lower after three days of gains on Wall Street as a mixed picture on tech earnings and trade negotiations faced traders.

Contracts for the S&P 500 fell 0.2%, reversing an earlier gain of 0.8%. Intel Corp. slumped more than 6% in premarket trading after the chipmaker’s weaker-than-expected outlook. Alphabet Inc. jumped on its estimate-beating earnings. Europe’s Stoxx 600 index was modestly higher.

The dollar strengthened, while the yen and Swiss franc retreated as investor demand for non-US haven assets waned. Gold slid 1.5%. Treasuries extended their gains from Thursday.

On the trade front, it was reported that China is considering suspending its 125% tariff on some US imports. Later, Foreign Ministry spokesman Guo Jiakun reiterated that China isn’t in negotiations with the US over tariffs, underscoring the complexities for investors as they track headlines out of Washington and Beijing.

Traders took some comfort from hopes that the Federal Reserve may reduce interest rates earlier than expected. Markets currently favor a quarter-point cut in June and a total of three such reductions by year- end.
Fed Governor Christopher Waller said he’d support rate cuts in the event aggressive tariffs under President Trump’s trade policies hurt the jobs market. Cleveland Fed President Beth Hammack told CNBC the central bank could move on rates as early as June if it has clear evidence of the economy’s direction.

The dollar is in the midst of a longer term depreciation while the shift away from US assets has further to go, according to the BofA team led by Michael Hartnett. The trend would continue until the Fed starts cutting rates, the US reaches a trade deal with China and consumer spending stays resilient.