Stock futures edge higher on U.S.-China trade deal hopes

[January 09, 2019]   By Sruthi Shankar

(Reuters) - U.S. stock index futures rose on Wednesday, setting up Wall Street for a fourth straight day of gains, as rising expectations of a trade deal between the United States and China boosted demand for risk assets across the world.

Both countries ended trade talks in Beijing that lasted longer than expected and officials said details will be released soon, raising hopes that an all-out trade war that could badly disrupt the global economy can be averted.

Optimism over the trade negotiations, health of the U.S. economy and Federal Reserve chair Jerome Powell's dovish remarks on interest rates have sparked a rally that has lifted the S&P 500 <.SPX> 9.5 percent from the 20-month low its hit around Christmas.
 

Shares of Boeing Co <BA.N>, which is sensitive to trade-related news, were up 0.7 percent in premarket trading. Shares of energy companies such as Exxon Mobil Corp <XOM.N> and Schlumberger NV <SLB.N> rose about 1 percent, as oil prices extended their rally. [O/R]

Amazon.com Inc <AMZN.O>, now the most valuable U.S. company, gained 0.7 percent. The online retailer has been the biggest boost to the markets in the recent rally.

But threatening to weigh on sentiment was the partial U.S. government shutdown entering its 19th day as Democratic lawmakers and the White House remain divided over Republican President Donald Trump's demand for money for a border wall.

Fitch warned it could cut the country's coveted triple-A sovereign credit rating later this year if the shutdown leads to it hitting its debt ceiling and hampering budget setting.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019. REUTERS/Brendan McDermid

At 7:53 a.m. ET, Dow e-minis <1YMc1> were up 84 points, or 0.35 percent. S&P 500 e-minis <ESc1> were up 7 points, or 0.27 percent. Nasdaq 100 e-minis <NQc1> were up 24.75 points, or 0.38 percent.

Apple Inc <AAPL.O> was up 0.4 percent, despite a Nikkei Asian Review report that the company had reduced planned production for its three new iPhone models for the January-March quarter.

The company had warned on holiday quarter sales last week, hammering its own stock as well as those of its suppliers, mostly chipmakers. The sector also got a beating on Tuesday after Samsung Electronics <005930.KS> flagged weak chip demand.

Those warnings have raised concerns about profit growth in the S&P tech sector <.SPLRCT>, which has powered the decade-long bull market on Wall Street.

A slowdown in S&P companies' profit growth in the fourth quarter, during which the index plunged about 14 percent, have largely been factored in, but the warning from Apple, the trade war and fading tailwinds from tax cuts have made investors more fearful of shrinking profits this year.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

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