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Stocks May Open Higher On Renewed Optimism About Trade - U.S. Commentary


Stocks are likely to see further upside in early trading on Tuesday following the substantial recovery seen over the course of the previous session. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 308 points.

Renewed optimism about U.S.-China trade talks may generate early buying interest after a telephone call between top officials from the world's two largest economies.

China's Commerce Ministry said Chinese Vice Premier Liu He spoke with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

"Both sides exchanged views on putting into effect the consensus reached by the two countries' leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work," the ministry said in a statement.

Indications the talks are moving forward has offset some of the skepticism about the potential for a trade deal after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day trade truce earlier this month.

A report from Bloomberg News that China is moving toward cutting tariffs on imported U.S.-made cars is likely to add to the positive sentiment.

Citing people familiar with the matter, Bloomberg said a proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China's Cabinet.

Just after his meeting with Xi, Trump claimed in a post on Twitter that China had agreed to reduce and remove tariffs on cars coming into China from the U.S.

On the U.S. economic front, the Labor Department recently released a report unexpectedly showing a modest uptick in producer prices in the month of November.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.

Excluding food and energy prices, core producer prices rose by 0.3 percent in November following a 0.5 percent increase in October. Core prices had been expected to edge up by 0.1 percent.

After moving sharply lower in morning trading, stocks staged a substantial turnaround over the course of the trading session on Monday. The major averages climbed well off their worst levels of the day and into positive territory.

The major averages all closed higher, although the Nasdaq outperformed its counterparts, climbing 51.27 points or 0.7 percent to 7,020.52. The Dow inched up 34.31 points or 0.1 percent to 24,423.26 and the S&P 500 edged up 4.64 points or 0.2 percent to 2,637.72.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 index fell by 0.3 percent, while Hong Kong's Hang Seng Index crept up by 0.1 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 surged up by 1.9 percent, the French CAC 40 Index and the German DAX Index are both jumping by 2.1 percent.

In commodities trading, crude oil futures are climbing $0.79 to $51.79 barrel after tumbling $1.61 to $51 a barrel on Monday. Meanwhile, after slipping $3.20 to $1,249.40 ounce in the previous session, gold futures are rising $3 to $1,252.40 an ounce.

On the currency front, the U.S. dollar is trading at 113.20 yen compared to the 113.33 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1373 compared to yesterday's $1.1356.

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