LIVE MARKETS-US stock futures rocket on US-China deal to reduce tariffs

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U.S. STOCK FUTURES ROCKET ON U.S.-CHINA DEAL TO REDUCE TARIFFS

U.S. stock index futures are jumping on Monday after the United States and China reached a deal to reduce tariffs, signaling a truce in a punishing trade war that had kept markets on edge for weeks.

The United States will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%, the two countries said on Monday. The new measures are effective for 90 days.

E-mini Dow futures YMcv1 are higher by around 2.5%, S&P 500 futures EScv1 are rallying around 3%, and Nasdaq 100 futures NQcv1 are posting a near-4% gain. Small-cap Russell 2000 futures RTYcv1 are rallying more 4%.

With this, uncertainty is being wrung out of the market. The CBOE market volatility index .VIX, which hit a high of 60.13 on April 7, has dipped under the 20.00 level on Monday for the first time since March 28.

Nearly all S&P 500 index .SPX sector SPDR ETFs are quoted higher in premarket trade with consumer discretionary XLY.P, up more than 5%, and tech XLK.P, up more than 4%, leading the charge.

Defensive sectors are laggards. Utilities XLU.P and staples XLP.P are both just slightly positive, and healthcare XLV.P is quoted down. Pharmaceutical stocks are under pressure after President Trump said he would cut prescription drug prices by 59%, closer to the level paid by other high-income countries.

All Mag 7 MAGS.K names are higher ahead of the open, and chip stocks SOXX.O are especially strong. MAGS is jumping about 5.5%, and SOXX is surging about 6.5%.

In any event, given the extent of the premarket strength, all three of the major indexes appear poised to trade back above their 200-day moving average.

The Dow last ended above this closely followed long-term moving average on April 2. The S&P 500 last finished above it on March 25, and the Nasdaq last closed above it on March 5.

Here is a premarket snapshot:

(Terence Gabriel)

MONDAY'S EARLIER LIVE MARKET POSTS:

EUROPEAN TRAVEL RETAIL: RIPE FOR CONSOLIDATION CLICK HERE

DUSTING OFF UKRAINE CEASEFIRE BASKETS CLICK HERE

EUROPEAN BANKS: A RESILIENT EARNINGS SEASON CLICK HERE

STAY BULLISH! US EQUITIES LIKELY TO OUTPERFORM EUROPE CLICK HERE

US-CHINA DEAL LIFTS MINERS, AUTOS, LUXURY; DRAGS DEFENCE CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES RALLY, PHARMA DOWN CLICK HERE

THE DEVIL'S IN THE LACK OF DETAIL CLICK HERE