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Stocks May Benefit From Claims Of Progress In Trade Talks - U.S. Commentary


Following the mixed performance seen in the previous session, stocks are likely to move to the upside in early trading on Friday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 109 points.

Continued optimism about trade talks between the U.S. and China may generate early buying interest on Wall Street.

A statement from the White House said high level U.S.-China trade talks this week led to "progress between the two parties" but noted "much work remains."

The White House said the U.S. hopes to see additional progress as discussions at the ministerial and vice-ministerial levels continue in Washington next week.

Traders may also react positively to news that both the House and Senate passed legislation to avoid another government shutdown.

President Donald Trump plans to sign the legislation but will also declare a national emergency in order to gain additional funding for construction of his controversial border wall.

The national emergency declaration is likely to face immediate legal challenges, however, with some lawmakers warning about the dangerous precedent set by the move.

On the U.S. economic front, the Labor Department released a report showing import and export prices both fell by much more than anticipated in the month of January.

The report said import prices fell by 0.5 percent in January after tumbling by 1.0 percent in December, while economists had expected import prices to edge down by 0.1 percent.

Excluding a steep drop in prices for fuel imports, import prices still dipped by 0.2 percent in January after coming in unchanged in the previous month.

The Labor Department said export prices also slid by 0.6 percent for the second consecutive month in January. Economists had expected export prices to slip by 0.1 percent.

Prices for non-agricultural exports fell by 0.3 percent in January after plunging by 1.1 percent in the previous month.

A separate report released by the Federal Reserve Bank of New York showed a notable rebound in the pace of growth in regional manufacturing activity in the month of February.

The New York Fed said its general business conditions index climbed to 8.8 in February from 3.9 in January, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 7.0.

The bigger than expected increase by the index came after it tumbled to its lowest level in well over a year in the previous month.

Just after the start of trading, the Federal Reserve is scheduled to release its report on industrial production in the month of January. Industrial production is expected to inch up by 0.1 percent in January after rising by 0.3 percent in December.

The University of Michigan is due to release its preliminary reading on consumer sentiment in the month of February. The consumer sentiment index is expected to rise to 93.0 in February from 91.2 in January.

After recovering from an initial move to the downside, stocks showed a lack of direction over the course of the trading session on Thursday. The major averages eventually ended the session on opposite sides of the unchanged line.

The tech-heavy Nasdaq pulled back going into the close but still ended the day up 6.58 points or 0.1 percent to 7,426.95, while the Dow dropped 103.88 points 0.4 percent to 25,439.39 and the S&P 500 fell 7.30 points or 0.3 percent to 2,745.73.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 1.9 percent.

Meanwhile, the major European markets have shown strong moves to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index are both spiking by 1.9 percent.

In commodities trading, crude oil futures are climbing $0.54 to $54.95 a barrel after rising $0.51 to $54.41 a barrel on Thursday. Meanwhile, after slipping $1.20 to $1,313.90 an ounce in the previous session, gold futures are advancing $5.80 to $1,319.70 an ounce.

On the currency front, the U.S. dollar is trading at 110.57 yen compared to the 110.48 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1252 compared to yesterday's $1.1295.

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