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US equity futures have cooled slightly overnight after the S&P 500 rallied above Liberation Day levels yesterday, amid the ongoing de-escalation between the US and China.

Risk sentiment is strong, with S&P 500 futures up 1.5% and Nasdaq 100 futures up 2.1%, while Asian equities have rallied 0.8% to start the week. This comes after headlines revealed that the first formal trade talks between the US and China made “substantial progress” and the two sides were “not as far apart as expected,” according to US negotiators.

Yesterday’s Fed meeting went as expected, with rates kept on hold. There was also little change in investor expectations, as three rate cuts are still priced in for the remainder of the year.