Dow futures rise as China says trade representatives are in ‘close contact’ with U.S.

Le Fonti International – December 3rd 2019
December 4, 2019
Wall Street rebounds, reassured by trade and rising oil prices
December 5, 2019

Dow futures rise as China says trade representatives are in ‘close contact’ with U.S.

Market awaits reports on U.S. jobless claims and factory orders

U.S. stock futures are higher for a second straight session early Thursday, with investors optimistic about prospects for a partial U.S.-China trade deal after Chinese officials indicated that delegates remain in “close contact”, but stocks are still on track for a weekly decline,

How are major benchmarks performing?

Futures for the Dow Jones Industrial Average YMZ19, +0.36% were trading 118 points, or 0.4%, higher at 27,761, those for the S&P 500 ESZ19, +0.33% were gaining 13.15 points to reach 3,124.25, a rise of 0.4%, while Nasdaq-100 futures NQZ19, +0.46% were climbing 42.25 points, or 0.5%, at 8,337.50.

On Wednesday, the Dow DJIA, +0.53% rose 146.97 points, 0.5%, to 27,649.78. The S&P 500 index SPX, +0.63% added 19.56 points, or 0.6%, to close at 3,112.76. The Nasdaq Composite Index  COMP, +0.54% advanced 46.03 points, or 0.5%, to end the session at 8,566.67.

For the week, the Dow is on track to decline 1.4%, the S&P 500 is poised for a 0.9% weekly skid, while the Nasdaq Composite was on track for a decline of 1.1%, as of Thursday’s close.

What’s driving the market?

Optimism about a Sino-American trade deal remained intact after a spokesman for China’s Ministry of Commerce, Gao Feng, said at a weekly briefing on Thursday that negotiations toward a so-called phase-one pact to cease tariff hostilities between the world’s largest economies are progressing. However, Feng didn’t provide further details on talks and emphasized that China wants a rollback of existing tariffs to be included as a part of any resolution.

The comments come after President Donald Trump, speaking at a meeting with German Chancellor Angela Merkel on Wednesday, described negotiations in upbeat terms ahead of a Dec. 15 deadline at which import duties will be placed on $156 billion in China goods. “We will make a lot of progress,” he said.

The latest developments have injected some positivity into a market that has swooned on negative news on trade relations and the prospect that a detente between the U.S. and China may not be achieved soon.

“An extension of yesterday’s rally is in the makings as the futures trade higher in pre-market activity,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a daily research note.

President Trump earlier in the week had raised fears that a resolution may not be achieved until after the U.S. 2020 presidential elections.

However, markets have since recovered some of their lost ground in the aftermath of that news.

Looking ahead, investors are awaiting U.S. jobless claim data and economic reports on international trade for October are due at 8:30 a.m. Eastern Time. A report on factory orders for October are also set to be released at 10 a.m.

What stocks are in focus?

Shares of office-messaging company Slack Technologies IncWORK, -4.03%  are in focus after the company reported quarterly results and raised its full-year guidance.

H&R Block’s HRB, -0.89% may come into focus after the tax-preparation company reported that its net loss widened from a year earlier in its recent quarter, and reaffirmed its revenue guidance for the year.

Dollar General Corp. shares DG, +0.36% rose in premarket trade Thursday, after the discount retailer beat estimates for its fiscal third quarter and raised its full-year guidance.

Tiffany & CoTIF, +0.27% reported a fiscal third-quarter profit that fell more than expected, and net sales and same-store sales that missed forecasts. The stock slipped 0.5% in premarket trading.

Shares of Michaels Cos. IncMIK, -0.21% tumbled before the bell after the arts-and-crafts products retailer reported fiscal third-quarter results that missed expectations and provided a downbeat outlook for the current quarter.

How are other markets faring?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +1.17% edged up 0.9 basis point to 1.790%.

Oil futures extended recent gains as the Organization of the Petroleum Exporting Countries weighed deeper cuts to global production, as the cartel attempts to lift sluggish crude prices. West Texas Intermediate crude for January delivery CLF22, +1.21%  on the New York Mercantile Exchange rose 0.4% to $58.64 a barrel. Meetings between OPEC and its allies are taking place Thursday and Friday.

Gold for February delivery GCG20, +0.03% edged up less than 0.1% at $1,480.80 an ounce on Comex.

The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.15%, fell 0.2% at 97.475 against a basket of a half-dozen currency peers, extending a weeklong slide.

In Asia overnight, the Hang Seng HSI, +0.59%  advanced 0.6%, the China CSI 300 000300, +0.77%  rose 0.8%, while the Shanghai Composite Index SHCOMP, +0.74%   closed 0.7% higher.

European stocks closed higher, with the Stoxx Europe SXXP, +0.30% trade 0.4% higher at 404.68.

Mark DeCambre is MarketWatch’s markets editor. He is based in New York. Follow him on Twitter @mdecambre.