Friday September 13th

13-09-2019

Dow set to rise for an eight straight day, nears record on growing optimism around US-China trade

U.S. stock index futures were slightly higher Friday amid improving sentiment around U.S.-China trade relations, with the Dow Jones Industrial Average and S&P 500 on the brink of registering all-time record highs. At around 7 a.m. ET, Dow futures rose 121 points, indicating a gain of 128 points at the open. S&P 500 and Nasdaq 100 futures also pointed to solid gains. Trade bellwethers Caterpillar and Boeing rose 0.6% and 0.9%, respectively, in the premarket.  Chipmakers Applied Materials and NXP Semiconductors both rose at least 1%. The Dow — which is riding a seven-day winning streak — is looking to surpass an intraday record high of 27,398.68, while the S&P 500 is closing in on its previous record of 3,027.98 points. Each index finished the previous session only slightly higher, short of their respective records. Market focus is largely attuned to global trade developments, as the world’s two largest economies continued to prepare for talks in early October aimed at breaking their trade war impasse. The New York Times reported Friday that China will exempt some U.S. agricultural products, including soybeans and pork, from additional tariffs. On Thursday, the U.S. welcomed China’s renewed purchases of American farm goods, with President Donald Trump saying it was expected Beijing would purchase “large amounts” of agricultural products. His comments came after his decision to delay increasing tariffs on $250 billion worth of Chinese goods from Oct. 1 to Oct. 15 as a “gesture of good will” to China. The U.S. and China have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment. On the data front, U.S. retail sales rose moderately in August, driven higher by a jump in auto buying and healthy online sales. But there were also signs that consumers have become more cautious. The Commerce Department says retail sales increased 0.4% last month, down from a healthy 0.8% in July. Excluding autos, sales were unchanged for the first time since February. Consumer sentiment for September and business inventories for July will follow slightly later in the session. Stocks in Asia rose on Friday as investors digested a series of overnight developments on the U.S.-China trade front as well as the European Central Bank (ECB). In Japan, the Nikkei 225 rose 1.05% to close at 21,988.29 as shares of index heavyweights Fast Retailing and Softbank Group gained 0.62% and 3.2%, respectively. The Topix index finished its trading day 0.93% higher at 1,609.87. Meanwhile, Hong Kong’s Hang Seng index added 0.68%, as of its final hour of trading. Markets in China and South Korea were closed on Friday for holidays. Oil slipped to around $60 a barrel on Friday as concern about a slowdown in the global economy and oil demand outweighed hints of progress in the U.S.-China trade dispute. The Organization of the Petroleum Exporting Countries and the International Energy Agency (IEA) both issued reports this week pointing to an oil surplus next year, despite an OPEC-led pact to cut supply that runs until March. “Oil prices have been slipping in recent days even as stock markets have rallied and inventory data has reported large drawdowns,” said Craig Erlam of OANDA. “The IEA and others continue to downgrade forecasts for demand as global economic growth fears mount.” Benchmark Brent crude was down 25 cents at $60.13 a barrel by 0830 GMT, while U.S. West Texas Intermediate was up 5 cents at $55.14. Gold prices rose back above the key $1,500 level on Friday as the U.S. dollar slipped on the back of a strong euro, though hopes for a thaw in Sino-U.S. trade tensions supported equity markets, capping bullion’s gains. Spot gold rose 0.1% to $1,500.28 per ounce, but was marginally down for the week. U.S. gold futures rose 0.03% to $1,507.6 per ounce.