News Of U.S.-China Talks May Lead To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside following the pullback seen over the two previous sessions.

The futures advanced following news that Treasury Secretary Scott Bessent will meet with China’s lead representative on economic matters during a trip to Switzerland on Thursday.

“My sense is that this will be about de-escalation, not about the big trade deal,” Bessent told Fox News. “But we’ve got to de-escalate, before we can move forward.”

Bessent called the massive tariffs imposed by the U.S. and China the “equivalent of an embargo,” adding, “We don’t want to decouple, what we want is fair trade.”

The markets may also benefit from a positive reaction to some of the latest earnings news, with shares of Disney (DIS) surging by 7.7 percent in pre-market trading after the entertainment giant reported better than expected fiscal second quarter results and raised its full-year guidance.

Chipmaker Advanced Micro Devices (AMD) is also seeing pre-market strength after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Super Micro Computer (SMCI) are tumbling by 6.0 percent in pre-market trading after the server maker reported fiscal third quarter results that missed expectations and provided disappointing guidance for the current quarter.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.

With CME Group’s FedWatch Tool currently indicating a 99.0 percent chance the Fed will leave interest rates unchanged, traders will look to the accompanying statement for clues about the outlook for rates.

After ending Monday’s volatile session mostly lower, stocks saw continued weakness during trading on Tuesday. The major averages all moved to the downside on the day, pulling back further off last Friday’s one-month closing highs.

The major averages finished the day firmly in negative territory. The Dow slumped 389.83 points or 1.0 percent to 40,829.00, the Nasdaq slid 154.58 points or 0.9 percent to 17,689.66 and the S&P 500 fell 43.37 points or 0.8 percent to 5,606.91.

Ongoing trade uncertainty continued to weigh on the markets following recent strength, which saw the S&P 500 close higher for nine straight sessions before yesterday’s pullback.

While Treasury Secretary Scott Bessent told CNBC on Monday the U.S. is “very close to some deals,” the lack of any concrete developments from trade talks has kept investors on edge.

During a meeting with Canadian Prime Minister Mark Carney, President Donald Trump expressed frustration with the media’s repeated questions about when the U.S. will sign new trade deals even as he claimed he “could sign 25 deals right now.”

“I wish they’d … stop asking how many deals are you signing this week?” Trump said. “Because one day we’ll come and we’ll give you 100 deals.”

In trade-related economic news, the Commerce Department released a report this morning showing the U.S. trade deficit spiked by much more than expected in the month of March.

The report said the trade deficit soared to a record high $140.5 billion in March from a revised $123.2 billion in February.

Economists had expected the trade deficit to widen to $129.0 billion from the $122.7 billion originally reported for the previous month.

The much bigger than expected trade deficit came as the value of imports surged by 4.4 percent to $419.0 billion, while the value of exports crept up by 0.2 percent to $278.5 billion.

Biotechnology stocks showed a significant move to the downside on the day, with the NYSE Arca Biotechnology Index plunging by 5.1 percent after ending the Monday’s trading at its best closing level in a month.

Vertex Pharmaceuticals (VRTX) helped lead the sector lower, plummeting by 10.0 percent after reporting weaker than expected first quarter results.

Considerable weakness was also visible among pharmaceutical stocks, as reflected by the 3.7 percent slump by the NYSE Arca Pharmaceutical Index.

Healthcare, transportation and housing stocks also saw notable weakness, while gold stocks extended Monday’s rally amid a continued surge by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are climbing $0.49 to $59.58 a barrel after surging $1.96 to $59.09 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,396.20, down $26.60 compared to the previous session’s close of $3,442.80. On Tuesday, gold soared $100.50.

On the currency front, the U.S. dollar is trading at 143.33 yen compared to the 142.45 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1361 compared to yesterday’s $1.1370.

Asia

Asian stocks advanced on Wednesday after confirmation that trade talks between the U.S. and China would take place in Switzerland this week, marking the first formal talks between the countries since U.S. President Donald Trump declared sweeping tariffs last month.

Sentiment was also bolstered after chipmaker Advanced Micro Devices reported strong financial results for the first quarter of 2025 and China reduced its policy rate to boost the economy.

Treasuries dropped and the dollar snapped three days of declines before a Federal Reserve meeting later in the day to determine policy amid rising economic uncertainty. Oil extended gains after rallying more than 3 percent in the previous session.

China’s Shanghai Composite Index rose 0.8 percent to 3,342.66 as the country’s central bank and financial regulators announced sweeping plans to cut key interest rates to support the economy, soften tariff impacts and stabilize markets.

Hong Kong’s Hang Seng Index crept up by 0.1 percent to 22,691.88 on optimism surrounding upcoming U.S.-China trade talks, with U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng expected to lead their respective negotiations teams.

Japanese markets ended slightly lower as traders returned to their desks after a two-day holiday. The Nikkei 225 Index edged down 0.1 percent to 36,779.66, snapping a seven-day winning streak. The broader Topix Index settled 0.3 percent higher at 2,696.16.

Automakers slumped on a stronger yen, with Honda, Toyota, Mitsubishi Motors and Nissan falling 2-3 percent. Pharma stocks also suffered heavy losses following Trump’s threat of new pharmaceutical tariffs.

Seoul stocks ended higher for a second day running, with the Kospi climing 0.6 percent to 2,573.80 as trading resumed after a long holiday weekend.

Local financial markets were closed on Monday and Tuesday for the Children’s Day and Buddha’s Birthday holidays.

Australian markets eked out modest gains, with energy stocks pacing the gainers as oil prices recovered from recent lows. Mining and bank stocks also witnessed broad-based buying.

NAB climbed 1.6 percent after its first-half earnings beat expectations. Buy now pay later lender Zip Co. soared 13 percent after reporting solid quarterly results and lifting its full-year cash earnings guidance.

The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,178.30, while the broader All Ordinaries Index closed up 0.4 percent at 8,399.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index climbed 0.6 percent to 12,496.89.

Europe

European shares have moved lower on Wednesday as investors assess a slew of earnings and await the Fed policy announcement later in the day for directional cues.

The downside, however, remained capped by upbeat German data and optimism surrounding upcoming U.S.-China trade talks.

German factory orders grew more than expected in March on robust foreign and domestic demand, data from Destatis showed.

Factory orders advanced 3.6 percent month-on-month in March after remaining flat in February. Orders are forecast to grow 1.4 percent.

On a yearly basis, factory orders logged an expansion of 3.8 percent, in contrast to the 0.2 percent fall in February.

The German DAX Index is down by 0.1 percent, the U.K.’s FTSE 100 Index is down by 0.4 percent and the French CAC 40 Index is down by 0.6 percent.

Vonovia SE, Germany’s largest landlord, has fallen after announcing that Luka Mucic would succeed Rolf Buch as its CEO by the end of 2025.

Veolia has also declined. The French utility and resource management company has agreed to buy Caisse de depot et placement du Quebec’s minority stake in its Water Technologies and Solutions subsidiary for $1.75 billion.

Swedish builder Skanska has also shown a notable move to the downside after its first quarter earnings came in below expectations.

On the other hand, German carmaker BMW has moved sharply higher after confirming its full-year outlook.

Danish pharmaceutical giant Novo Nordisk has also surged after reporting a better-than-expected increase in first quarter net profit.

U.S. Economic News

The Energy Information Administration is due to release its report on oil inventories in the week ended May 2nd at 10:30 am ET. Crude oil inventories are expected to decrease by 2.5 million barrels after falling by 2.7 million barrels in the previous week.

At 2 pm ET, the Federal Reserve is scheduled to announce its latest monetary policy decision followed by Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm ET.

The Fed is due to release its report on consumer credit in the month of March at 3 pm ET. Consumer credit is expected to increase by $9.5 billion in March after edging down by $0.8 billion in February.