Thursday February 6th

6-02-2020

Dow futures point to 4th straight day of gains, rise more than 100 points

U.S. stock index futures rose on Thursday after China announced it will halve tariffs on U.S. imports totaling about $75 billion. Around 7 a.m. ET, Dow Jones Industrial Average futures were up by 131 points, indicating a gain of 140 points at the open. S&P 500 and Nasdaq 100 futures also traded higher. It would be the fourth straight day of gains for the major averages. China’s finance ministry said the tariff cut was timed in conjunction with a U.S. decision last month to halve tariffs on roughly $120 billion worth of Chinese products. Tariffs on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, which will take effect on Feb. 14. That decision was made as part of a broader “phase one” trade deal between China and the U.S. The agreement put the U.S.-China trade war, which had been hurting global growth prospects, on hold. President Donald Trump has said previously a phase-two agreement would be struck at a later date. The cut also comes after the coronavirus death toll in China rose to 563, with a total of 28,018 cases confirmed as drugmakers race to find a vaccine. Stocks fell sharply last week amid fears the fast-spreading virus would thwart global economic growth. However,  the major U.S. stock indexes have surged this week to recover most of those losses. The S&P 500 and Nasdaq hit record highs on Wednesday, while the Dow climbed more than 400 points. But JPMorgan strategist Nikolaos Panigirtzoglou is not ready to sound the all-clear just yet. “Despite this week’s equity market rebound we are reluctant to chase short-term momentum,” Panigirtzoglou said in a note to clients. “Instead we tactically trim the risk of our portfolio further and recommend a more modest equity overweight.” “Although we recognize that the peak in the rate of increase in the number of new coronavirus cases appears to be behind us as containment measures thus far appear to have been effective, this could change as factories reopen in China and more people come in contact with each other,” said the strategist. “In other words, there is a significant risk of an unexpected re-acceleration of new coronavirus cases.” On the data front, weekly jobless claims are due at 8:30 a.m. ET, as well as preliminary fourth-quarter productivity figures and labor costs. Stocks in Asia jumped on Thursday as investors in the region reacted to positive developments on the U.S.-China trade front. Mainland Chinese stocks were among the biggest gainers of the day regionally following that announcement, with the Shenzhen composite surging 2.895% to end its trading day at approximately 1,727.24 while the Shenzhen component advanced 2.87% to close at 10,601.34. The Shanghai composite rose 1.72% to close at about 2,866.51. Stocks in Japan also saw strong gains on the day, with the Nikkei 225 up 2.38% to 23,873.59 and the Topix index gaining 2.07% to 1,736.98. South Korea’s Kospi soared 2.88% to close at 2,227.94. Meanwhile, Hong Kong’s Hang Seng index jumped 2.35%, as of its final hour of trading. Oil prices pared gains on Thursday after Russia reportedly rejected additional OPEC-led production cuts, the Wall Street Journal reported, citing unnamed cartel delegates. The Saudi-led producer group has been unable to reach a consensus over its response to China’s coronavirus outbreak. The committee, which is not a decision-making body, met for a third day in Vienna. Brent futures fell 29 cents, or 0.5%, to $55.00 a barrel, having risen 2.4% in the previous session. U.S. West Texas Intermediate futures gained 6 cents to trade at $50.81 per barrel. Gold prices rose on Thursday as mounting concern over the coronavirus and its impact on the global economy sent investors fleeing into the safety of bullion, overlooking China’s decision to halve tariffs on some U.S. goods. Spot gold gained 0.5% to $1,564.81 an ounce by 1048 GMT, having dropped on Wednesday to its lowest since Jan. 21 at $1,546.90. U.S. gold futures rose 0.4% to $1,568.60.