Thursday September 5th

5-09-2019

Dow futures jump more than 250 points after confirmation of US-China trade talks

U.S. stock index futures rallied Thursday after the U.S. and China agreed to meet next month in Washington to discuss trade. Around 7 a.m. ET, Dow Jones Industrial Average futures traded 256 points higher, indicating a gain of 264 points at the open. Futures on the S&P 500 and Nasdaq 100 were both higher. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.9% in the premarket as Advanced Micro Devices and On Semiconductor both gained more than 1%. Bank stocks such as J.P. Morgan Chase and Citigroup each traded more than 1% higher along with trade bellwethers Caterpillar and Boeing. China’s Commerce Ministry issued a statement Thursday morning saying that Liu He, Beijing’s top negotiator on trade, had spoken with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The two sides agreed to hold another round of trade negotiations in Washington, D.C., towards the beginning of next month, and consultations will be made in mid-September in preparation for the meeting, the statement said. “Both sides agreed they should work together and take practical actions to create favorable conditions for the negotiations,” according to a CNBC translation of the statement. The announcement came after the world’s two largest economies imposed new tariffs on each other’s goods at the start of the month, marking yet another escalation in the protracted trade war. Previously, both sides had indicated they would meet in September. On the data front, investors are likely to closely monitor a flurry of economic reports on Thursday. Company payrolls surged by 195,000 in August, well above Wall Street estimates and at a time when fears have been growing about a looming recession, according to a report Thursday from ADP and Moody’s Analytics. Economists surveyed by Dow Jones had been looking for a gain of just 140,000 following July’s 142,000, which was reduced downward by 14,000 from the original count. August’s growth was the best showing since the 255,000 added in April. The latest weekly jobless claims and second-quarter productivity and unit labor costs set to be released slightly later in the session. A final reading of services Purchasing Managers’ Index (PMI) for August, ISM non-manufacturing data for August, and factory orders for July will also be released early Thursday. Shares of Slack, maker of the popular workplace messaging chat app, were slammed after the company issued its first earnings report as a public company, briefly dropping below the reference price from its direct listing. Hong Kong stocks largely clung on to gains Thursday after seeing a 4% surge a day earlier, on the back of news that the city’s controversial extradition bill that’s sparked protests will be withdrawn. The Hang Seng index closed just below the flatline at 26,515.53, after strong gains on Wednesday. In mainland China, shares saw gains on the day. The Shanghai composite gained 0.96% to about 2,985.86, while the Shenzhen component rose 0.86% to 9,783.50 and Shenzhen composite added 0.93% to around 1,651.63. Other major markets in Asia Pacific saw gains on the day. The Nikkei 225 in Japan surged 2.12% to close at 21,085.94, while the Topix saw gains of 1.84% to finish its trading day at 1,534.46. Over in South Korea, the Kospi closed 0.82% higher at 2,004.75. Oil held north of $60 a barrel on Thursday on hopes of progress in resolving the U.S.-China trade row offset a report of a rise in crude inventories. The American Petroleum Institute (API), an industry group, on Wednesday said U.S. crude stockpiles rose by 400,000 barrels last week, while analysts had expected a fall. The government’s official supply report is due out later on Thursday. Benchmark Brent crude was up 1 cent at $60.71 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 20 cents to $56.06. Gold retreated on Thursday as investors booked profits after the metal rallied to a six-year peak in the previous session and hopes of a thaw in U.S.-China trade ties spurred demand for riskier assets. Spot gold fell 0.7% to $1,541.20 per ounce, having scaled $1,557 on Wednesday, its highest since April 2013. U.S. gold futures dropped 0.7% to $1,549.70 per ounce.