Donald Trump announced a constructive call with President Xi of China, addressing trade, Fentanyl, the Russia-Ukraine conflict, and the TikTok deal approval. Plans were made for further discussions, with a meeting set at the APEC Summit in South Korea.
Trump will visit China early next year, and President Xi is also expected to visit the United States. They are scheduled to have more conversations, expressing satisfaction over the TikTok deal and anticipating their upcoming encounter at the APEC Summit.
Market Implications
This news is a clear signal to reduce bets on high market volatility. We are already seeing the VIX, which was trading near 18 last week amid concerns over stalled trade talks, drop below 14 this morning. Selling VIX call options or buying puts could be a straightforward way to position for the expected calm heading into the APEC summit.
We should immediately look at call options on sectors with heavy China exposure, which have been underperforming for most of 2025. The semiconductor index (SOXX) is a prime target, as companies within it derive a significant percentage of their revenue from the Chinese market. We saw a similar pattern when these same stocks rallied hard on positive news during the trade negotiations back in 2019.
The mention of trade and the Russia-Ukraine war also impacts commodities. November soybean futures have already jumped, as traders anticipate renewed agricultural purchases, which Commerce Department data shows had fallen by 12% in the first half of this year compared to the prior period. Consider long positions in agricultural ETFs or futures, as a follow-through meeting would likely solidify this demand.
Digital Advertising and Currency Markets
Approval of the TikTok deal specifically removes a major uncertainty for social media advertisers and related e-commerce platforms. This could create opportunities in call options for companies in the digital advertising space that have seen valuations compressed by this risk. It also lessens the chance of retaliatory measures from Beijing against other U.S. tech firms operating in China.
In the currency markets, this development suggests a “risk-on” sentiment, which typically weighs on the U.S. dollar’s safe-haven status. The offshore yuan (CNH) has already strengthened against the dollar, moving from 7.31 to 7.26 in overnight trading. We could see further dollar weakness against commodity-linked currencies like the Australian dollar if this positive tone holds.
