U.S. Stocks May See Continued Strength On Trade Optimism

wallstreet oct15 13sep19

Reflecting renewed optimism about a possible U.S.-China trade deal, 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 86 points.

The markets may benefit from signs of easing trade tensions as China's Ministry of Commerce revealed plans to exempt U.S. agricultural products, including soybeans and pork, from additional tariffs.

China will add the agricultural products to a list of 16 types of American-made products granted tariff exemptions as a sign of goodwill ahead of the next round of trade talks.

The Commerce Ministry also said it welcomes President Donald Trump's move to temporarily delay raising the rate of tariffs on $250 billion worth of Chinese imports.

Meanwhile, Trump said he would think about an interim deal with China but would prefer a full agreement as the world's two largest economies look to end the widening trade war.

"If we're going to do the deal, let's get it done," Trump told reporters on Thursday. "A lot of people are talking about it, I see a lot of analysts are saying an interim deal — meaning we'll do pieces of it, the easy ones first."

"But there's no easy or hard. There's a deal or there's not a deal," he added. "But it's something we would consider, I guess."

The futures remained positive following the release of a Commerce Department showing U.S. retail sales increased by more than expected in August amid a jump in auto sales.

The Commerce Department said retail sales rose by 0.4 percent in August after climbing by an upwardly revised 0.8 percent in July.

Economists had expected retail sales to rise by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding the jump in auto sales, retail sales came in unchanged in August after surging up by 1.0 percent in July. Ex-auto sales had been expected to inch up by 0.1 percent.

Shortly after the start of trading, the University of Michigan is scheduled to release its preliminary reading on consumer sentiment in the month of September. The consumer sentiment index is expected to inch up to 90.9 in September after plunging to 89.8 in August.

The Commerce Department is also due to release its report on business inventories in the month of July. Business inventories are expected to rise by 0.3 percent in July after coming in unchanged in June.

Following the strong upward move seen on Wednesday, stocks fluctuated over the course of the trading day on Thursday but largely maintained a positive bias. The major averages once again ended the session at their best closing levels in over a month.

The major averages came under pressure going into the close but remained in positive territory. The Dow edged up 45.41 points or 0.1 percent to 27,182.45, the Nasdaq climbed 24.79 points or 0.3 percent to 8,194.47 and the S&P 500 rose 8.64 points or 0.3 percent to 3,009.57.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although major markets in China and South Korea were closed for holidays. Japan's Nikkei 225 Index surged up by 1.1 percent and Hong Kong's Hang Seng Index jumped by 1 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index is up by 0.3 percent and the German DAX Index is up by 0.6 percent.

In commodities trading, crude oil futures are rising $0.18 to $55.27 a barrel after sliding $0.66 to $55.09 a barrel on Thursday. Meanwhile, after rising $4.20 to $1,507.40 an ounce in the previous session, gold futures are slipping $0.80 to $1,506.60 an ounce.

On the currency front, the U.S. dollar is trading at 108.09 yen versus the 108.10 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1084 compared to yesterday's $1.1065.

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