A temporary de-escalation in the US-China trade war sparked a rally in major tech stocks on Monday, with Amazon and Tesla leading the charge.
The announcement of a truce between the two global powers boosted investor sentiment, driving up shares of Big Tech companies.
Amazon.com Inc (NASDAQ:AMZN) stock surged 8.6%, while Tesla Inc (NASDAQ:TSLA) gained 5.7%. Apple Inc (NASDAQ:AAPL, ETR:APC), Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB), and Nvidia Corp (NASDAQ:NVDA, ETR:NVD) also saw significant jumps, with Apple rising 4.8%, Meta climbing 5.3%, and Nvidia increasing by 4.4%.
Alphabet Inc (NASDAQ:GOOG) and Microsoft Corp (NASDAQ:MSFT) experienced more modest gains, with their stocks rising by 3% and less than 1%, respectively.
The truce was triggered after two days of high-stakes talks between US and Chinese officials. Under the agreement, the US will reduce tariffs on Chinese goods from as high as 145% to 30%, while China will lower its retaliatory duties on US imports from 125% to 10%.
“If tech continues to lead the rally in US stocks, then this rally could have legs, but we still do not see US stocks making fresh record highs on the back of the China/US trade deal,” said Kathleen Brooks, research director at XTB.
Despite the temporary nature of the tariff cuts, analysts at Jefferies see this truce as a strategic move to soothe financial markets. Jefferies suggested that the US was particularly eager to signal de-escalation, especially with the intention of stabilizing the bond and stock markets.
“The US was more desperate than China to deliver a de-escalation message,” analysts noted, cautioning that the tariff reductions should not be interpreted as a permanent solution.
While the immediate market reaction has been positive, analysts caution that the trade war is far from over. “Tariff levels are still high, and sectorial tariffs remain a possibility,” Jefferies added.