US-China Trade Talks In Malaysia Could Pave Way For ‘Huge Groundbreaking Moment’ For Tech Sector, Says Analyst: ‘Darker Bear Scenarios Off The Table’

• Scott Bessent said the threat of the 100% tariffs and the immediate initiation of a worldwide export control regime by China has gone off.
• Ives said the lingering overhang on tech stocks could be removed as progress in trade talks has a far-reaching impact on several key tech areas.
• Apple, Microsoft, Alphabet, Meta and Amazon are among the top tech names reporting in the unfolding week.

The “very positive” framework established between the U.S. and China following the weekend talks between high-level delegations from both countries is a “bullish” sign for the market, according to Wedbush analyst Daniel Ives.

The analyst said the outcome of the weekend negotiations and the planned talks between U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, in South Korea on Thursday, are particularly important heading into the tech-heavy earnings week.

 US-China Heading For Truce

Following two days of talks in Malaysia that concluded on Sunday, both sides struck a positive note. While a Chinese official said the two sides reached a preliminary consensus on a host of topics, including export controls, fentanyl, and shipping levies, U.S. Treasury Secretary Scott Bessent confirmed that the two sides had a “very good two days.”

Speaking to CBS, Bessent said, “I would believe that the so it would be an extra 100% from where we are now, and I believe that that is effectively off the table.” “So I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime.”

The Treasury Secretary noted that he and the Chinese Vice Premier He Lifeng discussed a wide variety of issues, “from the rare earth magnets to trade, to substantial purchases of American agricultural products, to the Chinese helping us in this fentanyl crisis that we have in the US.”

Without shedding details on soybean exports to China, Bessent said, “I'm not going to give you the details here, but I can tell you that the soybean farmers are going to be extremely happy with this deal for this year and for the coming years.”

Implications for Tech Companies

Wedbush’s Ives said he expects the broader trade framework or deal could be on the table this week, adding that this “would be a huge groundbreaking moment for the tech sector and markets.”

Following the trade discussions, the U.S. index futures moved sharply higher. The S&P 500 and Nasdaq 100 futures were up 0.66% and 0.84%, respectively. So far this year, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) exchange-traded funds (ETFs) that track the S&P 500 and Nasdaq 100 indices are up 16.6% and 21.2%, respectively. The major U.S. averages closed at fresh records on Friday, buoyed by a tame September inflation report.

On Stocktwits, the QQQ and SPY ETFs were among the top 20 trending equity tickers late Sunday. Retail sentiment toward the QQQ ETF improved to ‘neutral’ by late Sunday from ‘bearish’ a day ago, but the message volume stayed ‘normal. The SPY ETF continued to draw a ‘bearish’ mood from among retailers on the platform, with the message volume at ‘normal’ levels.

Ives said the lingering overhang on tech stocks could be removed as progress in trade talks has a far-reaching impact on the artificial intelligence (AI) revolution, chip production, Nvidia/AMD sales into China, software IP complexity, TikTok, and rare earth restrictions.

“The tea leaves appear to be very positive talks coming out of the weekend in Malaysia and would be a game-changer for the AI Revolution thesis if the US/China get to a more comprehensive trade deal, which would take the ‘darker bear scenarios’ off the table,” the analyst said. “We now await more details and news this week from South Korea in a potentially watershed moment for the US/China relationship and trade deals going forward, with the tech sector front and center.”

Apple, Microsoft, Alphabet, Meta and Amazon are among the top tech names reporting in the unfolding week, as the third-quarter reporting season enters its third week. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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