Investor Alert for Monday: U.S.-China Tariff Talks Start This Weekend. Monday Volatility?

Markets on Edge as U.S.-China Tariff Talks Loom — and Limited Progress May Disappoint Investors
Investors are entering the weekend with caution as U.S.-China trade talks are scheduled, with expectations centered around potential tariff reductions. Markets have partially priced in a move from the current 145% peak tariff rate on Chinese imports to something in the 50% range. However, recent commentary from U.S. officials and analysts suggests little substantive progress is likely this weekend.

Financial Implications:
If the talks result only in an agreement to keep talking — without a concrete reduction in tariffs — equity markets may react negatively on Monday. The S&P 500 has already staged a strong 13–14% rally, and positioning remains slightly long-to-neutral. Failure to deliver a tangible outcome could trigger a pullback, particularly given how much optimism is now priced in. Conversely, even a small policy shift toward a 50–60% tariff rate could sustain risk sentiment.

Investors and Traders, Have the Following in Mind:

• The S&P 500 is up 13–14% since recent lows, and April marked its second-best month of the year.

• Current tariffs on some Chinese goods peak at 145%; Some analysts anticipate a drop to 50–60%.

• A baseline global tariff rate of 10% is under discussion.

• Some companies have removed forward guidance, citing uncertainty.

• Airlines, autos, and consumer durables may feel the pinch from persistent price pressures.

Investor Takeaway:
With markets trading just 3.7% below pre-April highs, the risk-reward balance going into the weekend skews slightly bearish if no progress is made. A delay or disappointment could revive volatility early next week, especially with CPI and a court ruling on tariff powers due May 13. Investors should be prepared for a market response that reflects how real the outcomes of this weekend’s meetings appear. On the other hand, Trump may push forward with continued momentum after the US-UK deal, disappointing the short sellers betting on a disappointment. Monday’s stock market open will be quite interesting.

This article was written by Itai Levitan at www.forexlive.com.