Developments in U.S.-China trade talks appeared to help send risk markets higher early Monday. Late on Sunday, President Donald Trump said that thanks to “substantial progress” in talks with China he would “be delaying the U.S. increase in tariffs now scheduled for March 1.”
There are no major market-moving economic or earnings reports scheduled for Monday. Things should pick up on Tuesday when Federal Reserve Chair Jerome Powell testifies about the economy and monetary policy to the Senate Banking Committee and major pharma companies talk about drug pricing before the Senate Finance Committee.
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U.S. stocks pushed higher as an extension of a key deadline for the U.S. and China to come to a trade agreement spurred investors’ risk appetites.
The S&P 500 (^GSPC) rose 0.44%, or 12.31 points, as of 12:31 p.m. ET. The Dow (^DJI) rose 0.57%, or 148.14 points, while the Nasdaq (^IXIC) rose 0.55%, or 41.04 points.
President Donald Trump on Sunday wrote in a Twitter post that he was pushing back the scheduled increase in tariffs on Chinese goods set to take place after March 1, noting that the U.S. has made “substantial progress” in trade talks with China. The Chinese state-run Xinhua News Agency reaffirmed these remarks in its own official statement published Monday.
“Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement,” Trump wrote. “A very good weekend for U.S. and China!”
Some of the issues being addressed include intellectual property protection, technology transfer, agriculture, services and currency, Trump said. U.S. Agriculture Secretary Sonny Perdue wrote in a Twitter post Friday that the Chinese had committed to purchasing an additional 10 million metric tons of U.S. soybeans, an agricultural commodity which has been at the center of the trade war as China, the world’s largest soybean importer, pared back its purchases from the U.S. amid trade tensions. In January, China purchased 135,814 tonnes of U.S. soybeans, or nearly double the amount from December but more than 97% lower from the 5.82 million tonnes purchased in the year-ago period.
Progress toward a trade deal after more than a year of tensions between the U.S. and China has been a key driver of investor sentiment over the past several months. But these recent developments also come amid a host of other positive catalysts for equities, including Federal Reserve monetary policy aligned with a “patient” posturing and recuperating oil prices following a precipitous drop at the end of 2018.
“We believe stocks could run further though it’s only a matter of time until another catalyst appears on the landscape to challenge investors’ sentiment,” John Stoltzfus, managing director of Oppenheimer, wrote in a note Monday. “That said we remain highly constructive on equities stateside and internationally. So long as an agreement can be reached on trade between the U.S. and China we expect an upward re-rating of the global economy as the process of globalization is reengaged and reaffirmed if in a somewhat altered but improved state in terms of fairness.”
Elsewhere, crude oil prices slipped after Trump wrote in a Twitter post Monday morning, “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” West Texas Intermediate crude oil futures (CL=F) dropped 3.37% to $55.33 per barrel as of 12:22 p.m. ET. The commodity had hit a year-to-date high of $57.81 per barrel on Friday amid U.S. sanctions on OPEC nations Iran and Venezuela and a broader appetite for risk assets given trade progress.
The 10-year U.S. Treasury yield rose 2.6 basis points to 2.681% as of 12:33 p.m. ET ahead of a testimony from Federal Reserve Chairman Jerome Powell before Congress Tuesday and Wednesday.
Posted by :
Jack Dempsey, President
401 Gold Consultants LLC
jdemp2003@gmail.c9m