Stocks rallied on Monday after the US and China agreed to temporarily cut tariffs following weekend talks. The deal helped ease concerns about a lengthy trade war and gave investors hope that more progress could come soon. Sectors tied to China, like technology and retail, saw some of the strongest gains. Global markets also moved higher as confidence returned. While the agreement is only temporary, it marked a clear shift in tone and brought buyers back into the market.

Key Takeaways:

  • Dow Logs One of Its Best Days of the Year: The Dow Jones Industrial Average soared 1,160.72 points to finish at 42,410.10, rising nearly 2.8% on optimism over easing trade tensions. Monday marked the Dow’s strongest single-day point gain since April.
  • S&P 500 Clears 5,800 Mark as Rebound Builds: The S&P 500 surged 3.26% to close at 5,844.19, cutting its year-to-date losses to just 0.6%. The index is now more than 20% above its April intraday low, officially entering bull market territory. 
  • Nasdaq Soars as Tech Stocks Lead Charge: The Nasdaq Composite jumped 4.35% to settle at 18,708.34, notching its best day in over a month. Major tech names like Tesla, Apple, and Nvidia all posted strong gains, driven by optimism over improved US-China relations.
  • Europe Rallies on Trade Hopes and Tariff Truce: European equities moved decisively higher after the US and China agreed to cut tariffs for 90 days, boosting confidence in global trade. The Stoxx 600 gained 1.1%, led by a 5% surge in mining shares. France’s CAC 40 climbed 1.37%, Italy’s FTSE MIB rose 1.40%, and the UK’s FTSE 100 added 0.6% to reach its highest level in over a month. Germany’s DAX rose 0.2%, with more modest gains as investors awaited further detail on trade negotiations. LVMH, STMicroelectronics, and Stellantis were among the top gainers across the region, reflecting strength in luxury and tech.
  • Asia Sees Broad Gains Led by Hong Kong and India: Asia-Pacific markets climbed sharply after news of the tariff rollback. Hong Kong’s Hang Seng Index jumped 2.98% to a six-week high, with the Hang Seng Tech Index soaring over 5%. Mainland China’s CSI 300 rose 1.16% amid expectations of easing pressure on exports. In India, stocks rallied after a weekend ceasefire agreement with Pakistan, with the Nifty 50 and BSE Sensex gaining more than 3%. Japan’s Nikkei 225 added 0.38% while South Korea’s Kospi rose 1.17%. Australia’s ASX 200 ended flat despite early strength, as resource stocks pared back gains into the close.
  • Oil Prices Rebound on Growth Optimism: Crude oil rose as easing trade tensions lifted the outlook for global demand. US crude gained $1.06 to settle at $62.08, while Brent added $1.17 to reach $65.08 per barrel. Both contracts were up over 1.7%, recovering from multi-year lows earlier this month. The move came despite OPEC+ commitments to raise supply in the near term.
  • Treasury Yields Climb as Recession Fears Ease: Yields jumped on Monday as traders grew less concerned about an economic downturn. The 10-year Treasury yield rose to 4.477%, while the 2-year climbed to 4.002%. The market reaction suggested lower odds of near-term rate cuts, with investors rotating out of defensive assets.

FX Today:

  • EUR/USD Breaks Below 1.1200 as Uptrend Falters: EUR/USD dropped 1.38% to close at 1.1091, falling through key support around the 1.1200 mark. The move marked one of the steepest declines since the March rally began, and signals a shift in near-term momentum. Although the pair remains above its 50-day SMA at 1.1073 and the 100-day at 1.0731, technical structure is weakening. A daily close below the 50-day would suggest further downside ahead, with next major support near 1.1000. Resistance now stands at 1.1200 and 1.1350. Unless buyers regain control quickly, the recent uptrend risks deeper correction.
  • GBP/USD Falls Toward Key Support Near 1.3150: GBP/USD ended the day at 1.3179, down 0.89%, as upside momentum continued to fade. The pair pulled back after rejection near 1.3450, just below the August 2024 highs, and is now approaching dynamic support around the 50-day SMA at 1.3082. A daily close below that level would expose the 1.3000 threshold and test the sustainability of the March–April rally. The broader structure remains constructive, with all major SMAs sloping higher, but further downside could shift sentiment if 1.3100 fails to hold.
  • AUD/USD Retreats from 0.6450 as Bears Regain Control: AUD/USD closed at 0.6369, down 0.61%, after failing to sustain gains above the 0.6450 resistance level. The pair has now slipped below its 200-day SMA at 0.6457 and is hovering near the 100-day SMA at 0.6289. Price remains locked in a broader downtrend, with both the 100-day and 200-day SMAs sloping downward. Support sits near the 0.6289 and 0.6230 levels, while a break above 0.6500 is needed to revive bullish momentum. Without fresh catalysts, the pair risks drifting lower in the near term.
  • USD/CAD Extends Rally Above 1.3900, Eyes 200-Day SMA: USD/CAD ended the session at 1.3984, up 0.39%, as buyers pushed price closer to the 200-day SMA at 1.4001. The pair has climbed steadily from its April lows and is challenging long-term resistance. A confirmed breakout would shift medium-term bias to neutral after months of declines. Key support now lies around 1.3850 and 1.3730, with near-term momentum favouring additional upside if the pair can close above 1.4000 and approach the 50-day SMA at 1.4102.
  • USD/CHF Surges to 0.8453 in Strongest Rally Since March: USD/CHF jumped 1.74% to finish at 0.8453, marking its most aggressive move in weeks. The pair cleared the 0.8400 barrier and is targeting the 50-day SMA at 0.8524. Despite this bullish impulse, the broader structure remains weak with all major SMAs still trending downward. Sustained gains above 0.8450 and a break through the 50-day line would be needed to confirm a base. Short-term support lies at 0.8320 and 0.8250.
  • USD/JPY Breaks Above 148.00, Tests Long-Term Resistance: USD/JPY rallied 2.07% to close at 148.37, lifting the pair above key resistance and within range of the 200-day SMA at 149.56. The move follows a strong two-day recovery from support around 140.00. Price has now reclaimed the 50-day and 100-day SMAs, though both remain downward sloping. A close above the 200-day average would suggest a broader trend reversal is underway. Key support rests at 146.00–146.50, while resistance beyond the 200-day comes in near 152.00.
  • Gold Slides as Risk Appetite Returns, Holds Above $3,200: Gold declined sharply to settle at $3,235.45, losing 2.74% as traders rotated out of safe havens. The drop followed a failed breakout near $3,326, with price action forming another short-term lower high. Despite the setback, gold remains above the 50-day SMA at $3,137 and the 100-day at $2,953. A break below the $3,200 zone would challenge trend support and open the door for further declines toward the $3,100–$3,000 range. For bulls, reclaiming resistance around $3,350 is essential to restore upward momentum.

Market Movers:

  • Tech Stocks Surge on Trade Truce Tailwind: Shares of major tech companies jumped after the US-China tariff rollback eased pressure on global supply chains. Tesla gained 6.8%, Amazon rose 8.1%, and Apple added 6.3%. Meta Platforms also rallied nearly 8%, while chipmakers Nvidia, Broadcom, and ON Semiconductor all posted solid gains.
  • China-Exposed Stocks Rally on Tariff Reprieve: US-listed shares of Chinese companies advanced sharply. PDD Holdings rose 6.1%, Alibaba climbed 5.8%, JD.com jumped 6.5%, and Baidu added 5.1%. 
  • Retail Stocks Pop on Tariff Relief: Consumer names reliant on Chinese imports saw outsized gains. Five Below soared 21%, RH surged 16%, and Best Buy rose 7%. Estée Lauder, Nike, Lululemon, and Williams-Sonoma also climbed between 7% and 8%, while E.l.f Beauty rallied 10.8%.
  • NRG Energy Soars on $12 Billion Acquisition: Shares of NRG Energy jumped 26% after the company announced a deal to acquire a power portfolio from LS Power. The transaction, which includes natural gas assets in nine states, is expected to close early next year.
  • Drugmakers Rebound After Executive Order Clarity: Pharmaceutical stocks rebounded after fears surrounding a new pricing order eased. Merck gained 5.9%, while Pfizer and Bristol-Myers Squibb rose over 3%. Eli Lilly advanced 2.9%. However, CVS Health dropped 3.2% as the order included a provision allowing direct-to-consumer drug sales.
  • Chegg Jumps After Workforce Reduction: Chegg shares rose 7.5% after the company announced it would lay off 22% of its workforce. The move comes amid falling user engagement as students turn to AI tools, prompting a shift in the company’s cost structure.
  • KindlyMD Explodes on Cryptocurrency Merger News: Health-care company KindlyMD surged 251% following news it will merge with Nakamoto, a bitcoin investment firm. The announcement caught investor attention as Nakamoto founder David Bailey is a top crypto advisor to President Trump.

Monday’s sharp rally reflected a dramatic shift in sentiment as the unexpected US-China tariff rollback eased global trade concerns and reignited risk appetite. Gains were broad and deep, with technology, retail, and China-exposed names leading the charge. Treasury yields and oil prices climbed as investors moved away from defensive positions. While the 90-day pause offers only temporary relief, markets responded enthusiastically to signs that negotiations are on track. Attention now turns to whether this momentum can be sustained as talks continue and more details emerge in the weeks ahead.