Monday March 4th

4-03-2019

Stocks rise as US and China reportedly get closer to trade deal

U.S. stock index futures rose on Monday on a report that U.S. and China are getting close to a trade deal. At around 7 a.m. ET, Dow Jones Industrial Average futures were up 65 points, indicating a gain of more than 70 points at the open. Futures on the S&P 500 and Nasdaq 100 were also higher. The Wall Street Journal reported Sunday that China had proposed to bring down duties on certain American goods in an attempt to strike a deal with the Trump administration. The same report suggested both countries are at the final stage of their negotiations, which could see the country's leaders meeting at a special summit to sign a trade deal soon. "Markets expect a deal by the end of March, but the key here will be whether the deal results in the removal of all tariffs," said Tom Essaye, founder of The Sevens Report. "The reports this morning imply that might happen, but it will have to become reality for US-China trade to provide a sustainable positive catalyst for stocks." The Trump administration touted last week significant progress being made in U.S. negotiations with China. Treasury Secretary Steven Mnuchin told CNBC on Thursday the two sides were getting closer to a deal. White House economic advisor Larry Kudlow also told CNBC "the progress [between the two countries] has been terrific." However, The New York Times said in another report that the trade deal being discussed would do little to address key structural issues. These include efforts by the Chinese to curb cybertheft and subsidies the Trump administration argues make it harder for U.S. companies to do business in China. Shares of global trade bellwethers Caterpillar, Boeing and Deere were all up in the premarket. The back-and-forth on trade between the two countries has sent ripples through financial markets since last year, with investors fretting how tighter trade conditions could impact corporate profits. On the economic front, there will be construction spending figures out at 10 a.m. ET. Stocks in mainland China advanced on Monday following reports that the U.S and China might be close to finalizing a trade deal, with Beijing offering to lower tariffs on certain U.S. products. By the end of its trading day, the Shanghai composite rose 1.12 percent to close at about 3,027.58 — breaching the 3,000 level for the first time since June 2018. Meanwhile, the Shenzhen component surged 2.364 percent to close at 9,384.42 and the Shenzhen composite added 2.214 percent to finish its trading day at 1,599.48. Hong Kong's Hang Seng index also rose more than 0.7 percent in its final hour of trading. Other markets in Asia mostly gained. Japan's Nikkei 225 advanced 1.02 percent to close at 21,822.04 as shares of index heavyweight Fanuc jumped 3.48 percent. The Topix was 0.73 percent higher to end its trading day at 1,627.59. In South Korea, however, the Kospi shed earlier gains to close 0.22 percent lower at 2,190.66. Oil prices rebounded on Monday, buoyed by OPEC output cuts and reports that the United States and China are inching closer to a deal on a tariff row that has slowed global economic growth. International benchmark Brent crude futures were up 64 cents, or 1 percent, at $65.71 a barrel around 8:15 a.m. ET (1315 GMT), rebounding from Friday's 1.5 percent. Brent fell 3 percent last week. U.S. West Texas Intermediate crude futures were up 55 cents, or 1 percent, at $56.35 per barrel. WTI fell 2.5 percent on Friday, matching the weekly loss for the U.S. benchmark. Gold fell to the lowest in more than five weeks on Monday as the dollar held firm and investors opted for riskier assets on hopes of a thaw in a trade dispute between the United States and China. Spot gold slid 0.5 percent to $1,286.60 per ounce as of 1048 GMT, having touched $1,285.65, its lowest since Jan. 25 earlier in the session. U.S. gold futures were down 0.9 percent to $1,288. Gold tumbled 2.6 percent last week, its biggest weekly fall in over 1-1/2 years.