Wall Street Extends Gains Amid Reports of Breakthrough in US-China Trade Talks
New York (Mar 4) U.S. stocks are set to open higher Monday, extending gains on Wall Street amid one of the strongest starts to any trading year on record, amid multiple reports that the U.S. and China are nearing an agreement on trade that could see the world's two largest economies roll back tariffs within the coming weeks.
The Wall Street Journal first reported the potential for a deal, which could come as soon as this month, with other media outlets adding details on the kinds of agreements proposed and the nature of the breakthrough between Washington and Beijing. At the center of any potential agreement, however, appears to be a pledge from both China and the United States to roll back tariffs currently imposed on $350 billion worth of goods, with Beijing vowing deeper structural reforms alongside larger farm and energy purchases.
"The key question is - will all tariffs will be removed instantly, or will they be gradually dialled back?," said FXTM analyst Lukman Otunuga. "While the renewed risk appetite is seen boosting European and US stocks, investors should consider how much upside is left, given that markets have been actively pricing in the possible resolution to the trade saga."
"Once this major chapter is closed, what will markets focus on next - global monetary policy, the global slowdown, or other major risks?," he asked.
Stocks in both Europe and Asia traded at multi-month highs on the reports, with the bullish sentiment flowing into early U.S. equity futures trading, with contacts tied to the Dow Jones Industrial Average suggesting a 75 point gain at the opening bell and those linked to the S&P 500 indicating a 7.5 point advance for the broader benchmark that could take its year-to-date gain to just over 12%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% higher in early trading in New York and pegged at 96.62, while benchmark 10-year Treasury notes bumped 1.5 basis points higher to 2.75%.
Global oil prices extended gains, as well, amid hopes of at trade deal that could not only re-ignite the flagging Chinese economy but also potentially increase energy-sector purchases for the world's biggest consumer.
Prices were also supported from data late Friday from Houston-based oil services provider Baker Hughes, which said the number of U.S. drilling installations fell to a nine-month low last week, and a survey from Reuters which showed collective OPEC production fell to the lowest levels in four years last month.
Brent crude contracts for May delivery, the global benchmark, were marked 54 cents higher from their Thursday close and changing hands at $65.61 per barrel while WTI contracts for April were seen 33 cents higher at $56.13 per barrel.
TheStreet
