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Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a modestly higher opening on Monday following the pullback seen in the previous session.

Early buying interest may be generated in reaction to upbeat Chinese manufacturing data, which has helped alleviate concerns about the impact of the ongoing U.S.-China trade dispute.

Survey data from IHS Markit showed Chinese manufacturing activity expanded at a moderate pace in November, with growth reaching its strongest level since December 2016.

The Caixin manufacturing Purchasing Managers' Index rose slightly to 51.8 from 51.7 in October, signaling an improvement for the fourth consecutive month.

According to an official survey released over the weekend, the manufacturing sector returned to growth in November. The PMI advanced to 50.2 from 49.3, while the non-manufacturing PMI climbed to 54.4 from 52.8.

However, the positive sentiment may be offset by President Donald Trump announcing plans to reinstate tariffs on metal imports from Brazil and Argentina.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers," Trump said in a post on Twitter.

He added, "Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries."

After trending higher over the past several sessions, stocks gave back some ground during an abbreviated trading day on Friday. The major averages all moved to the downside, pulling back off Wednesday's record closing highs.

The major averages ended the session just off their worst levels of the day. The Dow fell 112.59 points or 0.4 percent to 28,051.41, the Nasdaq slid 39.70 points or 0.5 percent to 8,665.47 and the S&P 500 dropped 12.65 points or 0.4 percent to 3,140.98.

Despite the pullback on the day, the major averages still moved higher for the week. The Nasdaq surged up by 1.7 percent, the S&P 500 jumped by 1 percent and the Dow climbed by 0.6 percent.

The weakness on Wall Street came as traders cashed in on recent gains amid concerns rising tensions between the U.S. and China over the situation in Hong Kong could impact ongoing trade talks.

After President Donald Trump signed two bills in support of pro-democracy protesters in Hong Kong, a spokesman for China's Foreign Ministry threatened strong countermeasures.

Foreign Ministry spokesman Geng Shuang accused the U.S. of interfering in China's internal affairs and violating international law and the basic norms governing international relations.

"China will take strong counter-measures in response to the U.S. behavior that interferes in China's internal affairs and undermines China's interests," Geng said.

"No one shall underestimate China's determination in safeguarding national sovereignty, security and development interests," he added. "Nor shall they misjudge China's resolve in implementing the 'one country, two systems' principle and in upholding prosperity and stability in Hong Kong."

With a fresh round of protests expected over the weekend, the dispute over the situation in Hong Kong could potentially derail the long-awaited phase one trade deal.

Trading activity remained relatively light, however, with many traders still away from their desks following the Thanksgiving Day holiday on Thursday.

A lack of major U.S. economic data is also kept some traders on the sidelines along with the early close for the markets, which came at 1 pm ET.

Energy stocks saw substantial weakness on the day, with a steep drop by the price of crude oil weighing on the sector. Crude for January delivery has plunged $2.58 to $55.53 a barrel amid news of the resignation of Iraq's Prime Minister.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index has plummeted by 2.2 percent and the Philadelphia Oil Service Index has tumbled by 1.9 percent.

Steel and semiconductor stocks also saw considerable weakness, while gold stocks moved sharply higher amid a notable increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are jumping $1.05 to $56.22 a barrel after plunging $2.94 to $55.17 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,466.90, down $5.80 from the previous session's close of $1,472.70. On Friday, gold climbed $11.90.

On the currency front, the U.S. dollar is trading at 109.47 yen compared to the 109.49 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1030 compared to last Friday's $1.1018.

Asia

Asian markets rose on Monday as expectations for an economic recovery in Japan and China helped offset concerns that U.S. support for Hong Kong may stall the U.S.-China trade negotiations.

Chinese shares rose as upbeat factory activity reports helped offset investor anxiety over the prospects of a proposed U.S.-China trade deal. The benchmark Shanghai Composite Index inched up 3.83 points or 0.1 percent to 2,875.81, while Hong Kong's Hang Seng Index rose 98.23 points or 0.4 percent to 26,444.72.

Chinese manufacturing activity expanded at a moderate pace in November, but this was the strongest growth since December 2016, survey data from the IHS Markit showed.

The Caixin manufacturing Purchasing Managers' Index rose slightly to 51.8 from 51.7 in October, signaling an improvement for the fourth consecutive month.

According to an official survey released over the weekend, the manufacturing sector returned to growth in November. The PMI advanced to 50.2 from 49.3, while the non-manufacturing PMI climbed to 54.4 from 52.8.

The latest upturn was partly underpinned by a further rise in new business placed with Chinese manufacturers. Despite easing from October, the rate of new order growth remained solid overall.

Japanese shares rallied to reach their highest level in nearly 14 months as improved Chinese and Japanese economic data helped ease investor concerns about slowing global growth.

The latest survey from Nikkei revealed that Japan's manufacturing sector continued to contract in November, albeit at a slower pace.

Overall capital spending in Japan rose an annual 7.1 percent in the third quarter of 2019, extending gains in business spending for a 12th consecutive month and outpacing expectations for an increase of 5.0 percent.

The Nikkei 225 Index jumped 235.59 points or 1 percent to 23,529.50, while the broader Topix closed 0.9 percent higher at 1,714.49.

Video game-related companies and iPhone parts suppliers gained the most ahead of the year-end shopping season in the United States after data showed Americans spent more money on Black Friday in 2019 than ever before. Nintendo rallied 2.1 percent and Murata Manufacturing jumped 2.9 percent.

Australian markets eked out modest gains, led by financials and healthcare companies after the release of a slew of domestic data.

Australia's manufacturing sector fell into contraction in November, job advertisement declined again in the month and company operating profits fell in the third quarter of 2019, while house prices surged 1.7 percent across the country in November, separate reports showed.

The benchmark S&P/ASX 200 Index edged up 16.30 points or 0.2 percent to 6,862.30, while the broader All Ordinaries Index ended up 17.30 points or 0.3 percent at 6,965.30.

Banks ANZ, Commonwealth and Westpac rose between 0.3 percent and 0.8 percent, while Avita Medical advanced 1.6 percent in the healthcare sector. Heavyweight CSL and Cochlear rose around 1 percent each.

Woodside Petroleum, Santos and Oil Search fell 1-2 percent after WTI futures plunged 5 percent on Friday amid fresh trade tensions and record high U.S. crude production.

Seoul stocks ended off their day's highs after a report showed the country's manufacturing sector continued to contract in November, albeit at a slower pace.

Separate data showed that consumer prices in the country rose an annual 0.2 percent in November, falling below expectations for an increase of 0.7 percent. The benchmark Kospi edged up 3.96 points or 0.2 percent to 2,091.92.

Europe

European stocks have moved to the downside over the course of the trading session after moving modestly higher earlier in the day.

The euro area manufacturing sector continued to contract in November but the pace of decline slowed from October, final data from IHS Markit showed.

The factory Purchasing Managers' Index improved to 46.9 from 45.9 in October and above the flash 46.6. Nonetheless, the score remained well below the crucial 50.0 no-change mark and extended the current period of contraction to ten months.

While the U.K.'s FTSE 100 Index has dipped by 0.2 percent, the German DAX Index and the French CAC 40 Index are down by 0.5 percent and 0.6 percent, respectively.

Ted Baker shares have tumbled after the fashion retailer said it may have overstated the value of its stock by between £20 million and £25 million.

Meanwhile, Italian lender UniCredit has moved to the upside after it agreed to cut its stake in Turkey's Yapi Kredi Bank to below 32 percent.

Deutsche Lufthansa shares have also advanced despite its union Verdi calling a 24-hour strike at its catering unit LSG over the sale of some operations to Gategroup Holding.

Airbus has edged up slightly after terminating 16 employees in relation to an investigation into the potential misuse of client documents.

U.S. Economic Reports

At 10 am ET, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of November.

The ISM's purchasing managers index is expected to inch up to 49.2 in November from 48.3 in October, although a reading below 50 would still indicate a contraction in manufacturing activity.

The Commerce Department is also due to release its report on construction spending in the month of October at 10 am ET. Construction spending is expected to rise by 0.4 percent.

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