Why stock markets worldwide are in for a jump this week

12/05/2025 04:13 AST

Stock markets around the world could be in for a boost this week as hopes rise for a reset in US-China trade relations. Over the weekend, US President Donald Trump struck an unexpectedly upbeat tone after face-to-face negotiations with China resumed in Geneva-describing the talks as a "total reset" and "very good."

It's a notable shift in tone from the man who, just weeks ago, hit China with another round of punishing tariffs, pushing cumulative US duties on Chinese goods to a staggering 245%. Beijing fired back with 125% tariffs on American products. The back-and-forth has spooked investors, upended supply chains, and clouded the global economic outlook.

Softened rhetoric
But Saturday's meeting-the first in months between senior officials from both sides-appears to have softened the rhetoric. China's official news agency Xinhua called the talks "an important step" toward resolving the long-standing trade dispute. Trump echoed that sentiment in a Truth Social post, saying negotiations were conducted in a "friendly, but constructive" manner.

For investors, that's encouraging news. "Markets are looking for any signs that the worst is behind us," said Tom Essaye of The Sevens Report. "Even modest progress in the US-China dialogue can help lift risk sentiment."

Wall Street and global bourses had already ended last week on a cautiously optimistic note, fueled by speculation that while a sweeping deal is unlikely for now, both countries are open to de-escalating the trade war.

Subtle olive branch
In a move some saw as a subtle olive branch, Trump hinted he may roll back some of the tariffs, writing online that an "80% Tariff on China seems right"-a marked change from earlier hardline messaging.

Whether this is a turning point or just a pause remains to be seen. But with investors hungry for stability, and central banks wary of further economic strain, any sign of progress in US-China relations is likely to drive markets-and headlines-in the days ahead.

Khaleej Times