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A US-China tariff standstill may mean the "Magnificent Seven" trade does anything but stay in place.

While global markets soared on the news of reduced tariffs, the closely watched Roundhill Magnificent Seven ETF (MAGS) ripped 6% in premarket trading.

"I think given that [Mag 7] are showing that they can still monetize AI capex and some of them are increasing capex guidance as well is quite positive," eToro global markets analyst Lale Akoner said on Yahoo Finance's Opening Bid podcast.

The US and China agreed on Monday to ratchet down the tariff war for 90 days as each economy begins to feel the pressure of bruising penalties.

After a weekend of meetings in Switzerland, the US will reduce "reciprocal" tariffs on goods from China to 10% from 125%. A separate 20% tariff imposed by President Trump over what he says is China's role in the fentanyl trade will remain intact.

China will cut its retaliatory tariffs on US goods to 10% from 125%.

Traders use the Roundhill Magnificent Seven ETF as a proxy for the Mag 7, as its top holdings are the seven stocks.

"With US/China clearly on an accelerated path for a broader deal we believe new highs for the market and tech stocks are now on the table in 2025 as investors will likely focus on the next steps in these trade discussions which will happen over the coming months," Wedbush tech analyst Dan Ives said in a note this morning.

Read more: The latest news and updates on Trump's tariffs

Even before the latest trade news, the Mag 7 trade was climbing back into top form after a challenging stretch this year.

The Roundhill Magnificent Seven ETF rallied 18% from the April 8 low ahead of Monday's opening bell.

The gains reflect several items.

First, earnings from tech megacaps such as Microsoft (MSFT) and Alphabet (GOOG, GOOGL) crushed estimates. These companies beat analyst earnings estimates by an average of 8% in the first quarter, according to data crunched by Barclays.

The earnings outperformance quieted concerns that AI demand was slowing down due to the Trump administration's trade war.

Meanwhile, growth for the big-cap tech players in the first quarter was impressive.

Goldman Sachs data shows Mag 7 companies delivered 28% average earnings growth in the first quarter. The 493 other stocks in the S&P 500 delivered only 9% growth.

The read-through here is that the Mag 7 will likely handily beat the broader S&P 500 in earnings growth this year. With valuations off their 2024 peaks, investors have reasoned it's a good time to nibble.