Tuesday January 8th

8-01-2019

Dow set to jump 250 points amid US-China trade talks, tech shares rise

U.S. stock index futures were higher on Tuesday, with market participants cautiously optimistic Washington and Beijing could be on the verge of a trade deal. At around 9 a.m. ET, Dow Jones Industrial Average futures indicated a gain of 255 points at the open. Futures on the S&P 500 and Nasdaq 100 were also relatively upbeat. Shares of tech giants like Facebook, Amazon, Netflix and Google-parent Alphabet all rose before the bell. Apple’s stock also traded 0.5 percent higher. The moves in premarket trade come as dozens of officials from the world’s two largest economies continue talks to resolve their ongoing trade dispute. U.S. Commerce Secretary Wilbur Ross told CNBC on Monday that both global powers could reach a settlement “they can live with, and that addresses all the key issues.” China’s Foreign Ministry previously said Beijing had “good faith” to work with Washington to reach an agreement before a March deadline. However, many analysts remain deeply skeptical about the likelihood of both sides brokering a comprehensive trade deal. Strategists at MRB Partners said in a note the U.S.-China trade situation is setting itself up for a more benign outcome than had been previously expected.  “The U.S.-China power struggle will persist for years, but both economies are now slowing and neither government has the latitude to pursue policies that could threaten to trigger a global recession,” they said. “The Argentina handshake will morph into a near-term truce.” On the data front, the latest monthly Job Openings and Labor Turnover Survey (JOLTS) and consumer credit figures for November are expected to be published later in the session. Meanwhile, President Donald Trump announced plans to deliver a prime-time address to the nation Tuesday evening. The broad-based public appeal is expected to focus on the standoff over his proposed border wall that has shut down large chunks of the federal government. On Monday, the Dow closed almost 100 points higher, extending a recent recovery on Wall Street. The S&P and Nasdaq also advanced around 1 percent in the previous session. Risk appetite in financial markets received a significant boost at the end of the previous trading week, after stronger-than-expected U.S. jobs data and dovish comments from Federal Reserve Chairman Jerome Powell. In a bid to ease market concerns of slowing growth in the world’s largest economy on Friday, Powell said the U.S. central bank would be “patient” and flexible with monetary policy decisions this year. Stocks in Asia were mixed on Tuesday as investors waited for developments from the second day of U.S.-China trade talks. Japan’s Nikkei 225 rose 0.82 percent to close at 20,204.04 while the Topix index gained 0.39 percent to finish its trading day at 1,518.43. Over in South Korea, the Kospi slipped 0.58 percent to close at 2,025.27. The mainland Chinese markets fell on Tuesday. The Shanghai composite declined by 0.26 percent to close at 2,526.46 while the Shenzhen composite slipped 0.117 percent to finish at about 1,299.89. The Shenzhen component also fell 0.116 percent to close at 7,391.65. Over in Hong Kong, the Hang Seng index was largely flat during its final hour of trading. Oil prices rose slightly on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world’s two biggest economies, while OPEC-led supply cuts also tightened markets. International Brent crude futures gained 77 cents, or 1.3 percent, to $58.10 per barrel by 8:26 a.m. ET (1326 GMT). U.S. West Texas Intermediate (WTI) crude oil futures climbed 67 cents, or 1.4 percent, to $49.19 per barrel. Gold prices fell on Tuesday, as the dollar recovered from lows and hopes for a trade deal between China and the United States whetted risk appetite, making bullion less attractive. Spot gold slipped 0.62 percent to $1,280.69 per ounce as of 8:45 a.m. ET. U.S. gold futures were 0.64 percent lower at $1,281.60 per ounce. The dollar index was 0.26 percent higher against its peers, having dropped to its lowest since Oct. 22 the previous session.