Analysts Hesitate as U.S.-China Talks Set the Framework, but Details Are Still Missing

TradingKey - The ongoing de-escalation in U.S.-China trade tensions has prompted Wall Street heavyweights like Morgan Stanley and Goldman Sachs to turn more bullish on U.S. stocks. However, many analysts remain cautious — while a consensus framework has been reached through the London negotiations, key trade details, particularly around rare earth exports and U.S. semiconductor export controls, remain unresolved. For now, it’s too early to declare that the worst is behind us.

After two days of talks in London on June 10, both sides announced that they had reached agreement on how to implement the Geneva Protocol, submitting the agreed framework to their respective heads of state for review.

On the same day, U.S. stock indices continued to rise, with the S&P 500 gaining 0.55%. However, this gain was not as strong as some had hoped, indicating that investors are taking a cautiously optimistic stance toward the progress made in the negotiations.

As of the time of writing (June 11), futures for all three major U.S. indices were down, with S&P 500 futures falling about 0.30%.

Chris Weston, Head of Research at Pepperstone, noted that while the outcome was positive, the lack of reaction in S&P 500 futures and limited movement in the offshore yuan or Australian dollar suggests that the Geneva framework agreement was largely anticipated by markets.

He emphasized that the devil would be in the details. The volume of rare earth materials shipped from China to the U.S., and the specifics of U.S. chip export controls remain critical issues — and these are still subject to negotiation.

An analyst from National Australia Bank (NAB) pointed out that since the signing of the Geneva Protocol, trust between the two leaders has suffered setbacks. What currently exists is only a handshake-level agreement — the real test lies in the implementation of detailed terms. Therefore, it's way too early to say that we know we're in the midst of establishing a cast iron, new US-China trade agreement.

Strategy analysts at Saxo Markets also noted that while the market welcomes the shift from confrontation to coordination, the lack of further scheduled talks indicates that the path ahead remains uncertain — ultimately depending on whether President Trump and President Xi Jinping will approve and enforce the agreement.

In the past one to two weeks, major Wall Street banks including JPMorgan, Morgan Stanley, Citi, Goldman Sachs, and Deutsche Bank have expressed optimism over the cooling of the trade war and turned more bullish on U.S. equities. JPMorgan even stated that the most dangerous phase of Trump’s trade war has passed.

The S&P 500 recently closed at 6,038.81, near its highest level in three months and approaching all-time highs. Deutsche Bank forecasts that the S&P 500 could reach 6,550 by the end of 2025, while Morgan Stanley is betting on a target of 6,500 within the next 12 months.