Monday January 13th

13-01-2020

Stock futures rise amid trade deal optimism, Tesla gains

U.S. stock index futures rose Monday to start off the week amid optimism around U.S.-China trade relations. Around 7 a.m. ET, Dow Jones Industrial Average futures were up by 70 points, indicating a gain of 60 points at the open. S&P 500 and Nasdaq 100 futures also pointed to solid gains to start off the session. Investors are monitoring U.S.-China trade as a Chinese delegation is due to travel to Washington, D.C., Monday for the signing of the so-called phase one trade deal on Wednesday. The deal is expected to lower tariffs on some Chinese-made goods, as well as increase China’s purchases of U.S. agricultural products. The deal underwent a lengthy translation in recent weeks, but Treasury Secretary Steven Mnuchin said China’s commitments remained unchanged after the process. Mnuchin noted on Sunday that this is “a very, very extensive agreement.” According to a Wall Street Journal report, the U.S. and China have agreed to hold semiannual talks to resolve disputes and push for reforms. China and the U.S. have been locked in a trade war for about two years, stoking concerns over corporate profits and global economic growth.  To be sure, The South China Morning Post reported the Chinese government said the trade war is “not over yet,” adding the signing of Wednesday’s agreement is just the “first round of a game.” Wall Street is coming off a solid performance last week, with the major indexes posting strong gains and reaching all-time highs. However, stocks came under slight pressure on Friday on the back of disappointing employment data. The U.S. economy added 145,000 jobs in December, lower than what economists polled by Dow Jones had estimated at 160,000 jobs. Tesla shares rose 1.9% in the premarket after an analyst at Oppenheimer hiked his price target on the stock to $612 per share from $385 per share. The analyst said Tesla’s “risk tolerance ... and larger ambition than peers are beginning to pose an existential threat to transportation companies that are unable or unwilling to innovate at a faster pace.” Stocks in Asia mostly rose by the close on Monday as investors await the signing of a phase-one trade deal between the U.S. and China. Mainland China markets jumped by the close. The Shanghai composite rose 0.75% to close at 3,115.57, while the Shenzhen composite jumped 1.36% to 1,822.35. The Shenzhen component was up 1.47% to 11,040.20. Hong Kong’s Hang Seng index also bounced and was up 1.11% in its final hour of trade. In South Korea, the Kospi rose 1.04% to close at 2,229.26. Japan’s markets are closed for a holiday on Monday. Taiwan’s benchmark Taiex index rose 0.74% to close at 12,113.42. Oil prices dipped slightly on Monday as investors shift their focus away from easing Mideast tensions to this week’s scheduled signing of an initial U.S.-China trade deal whose details remain to be seen. Brent crude fell 3 cents to $64.95, while West Texas Intermediate crude was unchanged at $59.04. Gold prices fell nearly 1% on Monday as optimism in equity markets ahead of the signing of an interim U.S.-China trade deal and lack of further escalation in Middle East tensions diminished bullion’s safe-haven appeal. The U.S.-China Phase 1 agreement is due to be signed at the White House on Wednesday. Spot gold dipped 0.6% to $1,553.32 per ounce, having fallen 1% to $1,546.27 earlier in the session. U.S. gold futures fell 0.4% to $1,554.2.