Investor sentiment higher on hopes China central bank will inject more stimulus after weak data

Investors are coming back from the bank holiday in an upbeat mood on Tuesday, pushing U.S. stock futures firmly higher on fresh hopes the Chinese central bank will inject more stimulus after a round of weak trade data.

Futures for the Dow Jones Industrial Average added 303 points, or 1.9%, to 16,422, while those for the S&P 500 index gained 37.55 points, or 2%, to 1,959.72.

Futures for the Nasdaq 100 index  added 78.50 points, or 1.9%, to 4,272.50.

U.S. stock markets were closed on Monday for Labor day, when European markets rose, but Asia ended mostly lower.

Earlier Tuesday, data showed Chinese exports fell in August for a second straight month, highlighting concerns that the world’s second-largest economy is shrinking.

Exports dropped 5.5% after falling 8.3% in July. Imports slid 13.8% in August.

Analyst at Rabobank said in a note that the latest numbers mirror weak domestic demand at the time when external demand is also relatively soft, which puts pressure on the authorities to step in and increase spending, and on the Chinese central bank "to potentially inject another dose of monetary policy stimulus and/or allow the yuan to weaken.”

China-easing expectations helped buoy markets in Asia on Tuesday, where the Shanghai Composite Index closed 2.91% higher.

Chinese ETFs were also surging premarket, with the Direxion Daily FTSE China Bull 3X Shares adding 16% and Direxion Daily CSI 300 China A Share Bull 2X Shares 9.6% higher.

Also on Tuesday, Chinese stock market regulators unveiled plans to introduce a “circuit breaker” mechanism for its stock exchanges, aimed at preventing panic selloffs during heightened volatility.