Market Rally Loses Momentum as China Denies Ongoing US Trade Talks

Global markets showed signs of hesitation Thursday after initial optimism over a potential softening in US-China trade tensions began to fade.

US stock futures dipped, and the dollar retreated as investor hopes for progress in trade relations were tempered by conflicting signals from Washington and Beijing.

The Dow Jones Industrial Average futures slipped 0.23% following two days of gains, while S&P 500 and Nasdaq 100 futures also edged lower. Treasury yields declined, and gold prices climbed back above $3,350 per ounce, signaling renewed caution among investors.

The volatility follows recent headlines suggesting the Trump administration may be considering a reduction in tariffs on Chinese imports. President Trump said Wednesday his team was “actively” engaged in discussions with Beijing. However, China responded Thursday by stating that no such negotiations are currently underway.

“There have been no recent talks, let alone any agreement,” Chinese officials said, countering reports that the two nations were making progress toward resolving trade disputes.

The uncertainty reflects a broader pattern of unpredictable policy signals from the US administration. This week alone, President Trump publicly criticized Federal Reserve Chair Jerome Powell, only to later backtrack. Such reversals have added to market confusion and driven demand for traditionally safer assets like gold, the yen, and the Swiss franc.

“We’re seeing extreme short-term volatility,” said Salman Ahmed, global head of macro strategy at Fidelity International. “Investors are adjusting to a world where the economic rulebook is being rewritten, and we appear to be past the era of peak globalization.”

Meanwhile, investors are also monitoring corporate earnings for further clues about how trade tensions and economic uncertainty are affecting businesses. Companies including Chipotle, PepsiCo, and Merck have warned that tariffs are increasing operational costs. Major firms such as Alphabet and Intel are set to report results later Thursday, which could offer additional insight into broader economic sentiment.

Other market indicators reflected the uncertainty. The WSJ Dollar Index fell 0.45%, while 10-year Treasury yields declined to 4.33%. European and Asian stocks were mixed. Japan’s Nikkei rose by 1%, while Hong Kong’s Hang Seng Index fell 0.7%. The broader MSCI Asia-Pacific index outside Japan dipped 0.4%.

Despite fleeting optimism about a shift in trade strategy, US Treasury Secretary Scott Bessent clarified that any move to reduce tariffs would not be made unilaterally. He emphasized that broader issues, beyond just tariffs, would need to be addressed in any potential agreement with China.

Brent crude oil prices stabilized near $66 per barrel, and spot gold rose 1.5% to $3,336.84 per ounce.

Market strategists continue to urge caution.

“The danger of trading off headlines is that the narrative can shift overnight,” said Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management. “There’s still a long road ahead before we see tangible changes in US-China trade dynamics.”

The Wall Street Journal, Bloomberg, and Reuters contributed to this report.