US open: Strong start on the Street after Trump tweets out trade war ceasefire

Trading on Wall Street was off to a strong start on Monday, with stocks starting to recover from heavy losses at the end of last week as worries about a US trade war with China eased slightly.

At 1515 BST, the Dow Jones Industrials Average and S&P 500 were both up 0.72%, while the Nasdaq Composite was gaining 1.24%.

The positive tone followed a tweet on Sunday by Donald Trump which was viewed by many as conciliatory and signaled that the US and China may be able to strike some sort of deal on trade.

"President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its trade barriers because it is the right thing to do. Taxes will become reciprocal & a deal will be made on intellectual property. Great future for both countries!" Trump tweeted.

Also helping to keep the mood upbeat was confirmation from North Korea that it was prepared to discuss denuclearising the Korean Peninsula with the US.

Oanda analyst Craig Erlam said: "Whether the moves we’re seeing at the start of the week in Asia and Europe - and in US futures - reflect optimism that a solution will be found or are simply a case of profit taking on Friday’s moves isn’t clear but a speech from Chinese President Xi Jinping scheduled for Tuesday may point towards the former. China has been gradually opening up its markets for a long time now and there is hope that Tuesday’s speech may contain some commitments that will help kick-start negotiations between the world’s two largest economies.

Erlam said that the message from White House Senior Economic Advisor, Larry Kudlow, and Director of the White House's National Trade Council, Peter Navarro, in recent days had been that, while Trump was willing to embark on tariffs, he was also "open to negotiations" in order to avoid them.

"This very much supports the view that this is simply a tactic to get China to the negotiating table and perhaps we can start to see less confrontational talk and more willingness to find a diplomatic solution," Erlam concluded.

Over the weekend, Trump's administration imposed sanctions on seven Russian oligarchs and 12 companies to punish the country for actions in Crimea, Ukraine and Syria, and for attempting to subvert Western democracies. The move sent Moscow-listed stocks tumbling on Monday.

Against that backdrop, the main focus of the week on the economic front was expected to be the release of the latest US inflation figures and FOMC meeting minutes, both on Wednesday.

In corporate news, clinical stage gene therapy company AveXis soared 78.28% after agreeing to be bought by Swiss drug maker Novartis for $8.7bn in cash, or $218 per share.

Investors were also likely to be looking ahead to the start of the first-quarter earnings season later in the week, with releases due from the likes of BlackRock, Wells Fargo and JPMorgan Chase.