Can US-China Tariff Reductions Boost Dow, S&P 500, Nasdaq and the FTSE 350?

Highlights

• US and China agree to reduce tariffs temporarily, easing trade tensions across global markets

• Major US stock indexes rise sharply, with technology shares leading the surge

• Pharmaceutical sector under pressure as US administration signals drug pricing reforms

US stock markets began the week with a sharp upward movement following an agreement between the US and China to implement a temporary pause on trade tariffs. The decision to reduce duties on goods exchanged between the two largest economies created a wave of positive sentiment across equities, benefiting key indexes including the Dow Jones, S&P 500, and Nasdaq 100.

The announcement influenced sentiment across other global markets, including those in Europe. UK equities within the FTSE 350 were also observed amid expectations of improved international trade conditions. The pause on tariffs is set to remain in place for a limited period, creating a short-term shift in market dynamics and intercontinental commerce.

Technology Sector Leads Gains Across Indexes

Following the tariff announcement, technology companies in the US market showed significant strength. Firms involved in semiconductors, consumer electronics, and e-commerce experienced an increase in demand during early trading sessions. Companies like Nvidia, Apple, Tesla, and Amazon were among the technology stocks driving the upward movement within the Nasdaq 100.

The rise in technology shares also supported broader gains across the S&P 500 and Dow Jones. As trade barriers ease, the tech sector, heavily reliant on global supply chains and international sales, responded to the news with increased share activity.

Currency and Commodity Markets Respond

Alongside equity markets, movements were also recorded in foreign exchange and commodity markets. The US dollar strengthened in response to economic optimism following the announcement. US Treasury yields moved in alignment with these developments, reflecting a shift in expectations around capital flows.

Oil markets also reacted to the news, with prices rising as the easing of trade constraints indicated a rebound in global demand. Commodities broadly gained as markets factored in an improved international trade environment.

Pharmaceutical Stocks Weaken Amid Price Reform Signals

In contrast to the positive momentum in technology and commodity-linked stocks, pharmaceutical companies experienced a downturn. Remarks from the US administration over the weekend pointed to significant reforms in prescription drug pricing. This development weighed on healthcare-related shares, both domestically and in international markets.

Companies involved in the development and sale of weight-loss and chronic disease treatments saw declines. Firms such as Eli Lilly and Novo Nordisk came under pressure amid expectations of lower revenue under proposed pricing frameworks.

Key Economic Indicators and Earnings on Watch

Attention now turns to a series of economic indicators set for release this week. Data related to consumer prices, producer prices, and retail performance will provide additional insight into the state of the US economy following recent tariff developments.

In addition, several publicly traded companies are expected to release quarterly financial results. Among those due to report are names from media, education technology, and retail sectors. These earnings updates will offer further clarity on corporate performance amid evolving global trade conditions.

Impact on UK Markets and the FTSE 350

The reaction to the US-China tariff decision has implications for UK-listed companies as well. The FTSE 350, which includes a range of large-cap and mid-cap businesses, could experience shifts in sentiment and trading activity linked to international developments.

UK-based firms with global operations may benefit from the temporary easing in trade restrictions. Sectors such as industrials, technology, and consumer goods could see increased activity, while healthcare-related businesses may encounter headwinds depending on further clarity on US policy directions.