Stocks jump after Trump says U.S. and China are "getting back to the table"

By Aimee Picchi

/ MoneyWatch

Trump says China wants to negotiate on trade

Stocks surged in early U.S. trading after President Donald Trump praised his Chinese counterpart on Monday and said Beijing had reached out to Washington to resume trade negotiations. His comments eased investor concerns about rising tensions in the trade war between the world's two largest economies.

The Dow rose 281 points, or 1.1%, to 25,910 shortly have markets opened, while the S&P 500 and Nasdaq indices also gained. Before Mr. Trump's comments, stock futures had pointed to a weak opening for the trading session on Monday.

Great respect for the fact that President Xi & his Representatives want “calm resolution.” So impressed that they are willing to come out & state the facts so accurately. This is why he is a great leader & representing a great country. Talks are continuing!https://t.co/0sotrd1Mzh

— Donald J. Trump (@realDonaldTrump) August 26, 2019

The renewed hopes for a deal come after Mr. Trump escalated the trade war on Friday following China's announcement that it plans to hike tariffs on $75 billion of U.S. imports to its country. In a retaliatory gesture, the president later that day said his administration would boost tariffs on $550 billion in Chinese imports, deepening a trade war that many fear could tip the U.S. and global economies into recession.

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That prompted the Dow to plunge more than 600 points on Friday, with the S&P 500 suffering its fourth straight weekly loss. In one of Trump's tweets he "hereby ordered" U.S. companies with operations in China to consider moving them to other countries — including the U.S.

The latest announcement from Mr. Trump, indicating trade talks may resume, buoyed investor sentiment. The U.S. also agreed to a new trade deal with Japan on Sunday, which one analyst described as "impressive."

"The good news is that over the weekend, Japan and the U.S. forged an impressive new trade deal that will have a positive impact on both countries and be a great deal for the American heartland where Japan has agreed to lower tariffs on U.S. beef and pork and agreed to buy more corn and agricultural products," wrote Bruce Bittles, wrote Baird chief investment strategist in a Monday research note.

Trump raises tariffs on Chinese imports

Uncertainty remains high, however, about the next developments in the trade dispute, which has repeatedly seen the sides attempt to negotiate before ending in acrimony and more tariffs and trade penalties.

After Asian shares mostly fell on concerns about an escalation Friday in the dispute, markets in Europe and U.S. futures perked up after Trump said that his trade negotiators had received two "very good calls" from China on Sunday. China's foreign ministry replied, however, that it didn't know what Trump was talking about.

–With reporting by The Associated Press.

First published on August 26, 2019 / 9:52 AM

© 2019 CBS Interactive Inc.. All Rights Reserved.

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