LDN - Business

Stock futures jump on trade talk hopes; jobs data in focus

[January 04, 2019] By Shreyashi Sanyal

(Reuters) - U.S. stock index futures jumped on Friday after China said it will hold a fresh round of trade talks with the United States and ahead of, what is expected to be, a healthy U.S. employment report.

Dow e-minis <1YMc1> were up 286 points, or 1.26 percent at 7:29 a.m. ET. S&P 500 e-minis <ESc1> were up 1.33 percent and Nasdaq 100 e-minis <NQc1> were up 1.65 percent.

China and the U.S. will hold vice ministerial level trade talks in Beijing on Jan. 7-8 to try and resolve their dispute with less than two months left for their tariff truce to end.

The trade war between the two countries have played a major part in fanning fears of a global economic slowdown and roiled global financial markets for most of last year.

The fears were heightened on Thursday after data showed U.S. factory activity slowed last month and Apple Inc <AAPL.O> gave a dire revenue warning, pinning the blame mostly on China, that sent Wall Street plunging.

The Labor Department's closely watched nonfarm payrolls report at 8:30 a.m. ET (1330 GMT) is likely to show job growth picked up in December with wages expected to have risen solidly, and that could help markets.

However, a strong employment report could well keep the Federal Reserve on course to continue raising interest rates this year, another concern that has left investors fretting.

"While indexes are higher on trade hopes that an overly positive job market report will likely overshadow the 'Hope Rally', which can renew Fed concerns," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

[to top of second column]

Traders look at price monitors as they work on the floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., January 3, 2019. REUTERS/Shannon Stapleton

U.S. financial markets are projecting that there is little room for further hikes, the latest sign of which came on Thursday when 2-year U.S. Treasury yields <US2YT=RR> fell below the Fed's policy rate for the first time in over a decade.

The recent spate of weak data and Apple's warning has also left investors jittery, with the earnings season around the corner.

Analysts on average expect profits of S&P 500 companies to increase by 15.5 percent in the fourth quarter, outpacing the 14.8 percent growth in the year-ago quarter, according to Refinitiv's IBES. But the current estimate is lower than the 20 percent growth analysts were expecting in early October.

Among stocks, Netflix Inc <NFLX.O> rose 3.2 percent after Goldman Sachs added the streaming provider to its 'Americas Conviction List' and said the stock represented one of the best risk/reward models in the internet sector.

Intel Corp <INTC.O> climbed 3 percent after BofA Merrill Lynch said the chipmaker was well positioned to outperform its large-cap peers in 2019.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

Back to top