Dow Futures Gain, Global Stocks Steady Ahead of U.S.-China Trade Signing, Q4 Earnings

Wall Street looks set for modest gains Monday as investors await details of the U.S-China trade agreement and prep for the start of the Q4  earnings season.

The Monday Market Minute

  • Global stocks mixed as investors await details of the phase one U.S.-China trade agreement and prep for the start of the fourth quarter earnings season.
  • Treasury Secretary Mnuchin says English-language text of the agreement will be published at the signing ceremony at the White House Wednesday.
  • Asia stocks hit 19-month high as investors hope deal will ignite 2020 trade activity, while European shares edge higher as currencies ease against the dollar.
  • S&P 500 earnings are likely to fall 0.6% from the fourth quarter of 2018, according to Refinitiv data, with 26 companies -- including major Wall Street banks -- set to report this week.
  • U.S. equity futures suggest modest opening bell gains on Wall Street ahead of employment trends data at 10:00 am Eastern time.

U.S. equity futures suggest a positive start to the week on Wall Street as investors await details of the phase one trade agreement to be signed Wednesday between Washington and Beijing and prep for the start of the fourth quarter earnings season as stocks remain within touching distance of all time highs.

Treasury Secretary Steven Mnuchin told Fox's "Sunday Morning Futures with Maria Bartiromo" that details of the U.S.-China agreement would be made public when the two sides put their signatures on the deal at a White House ceremony on Wednesday. 

He also denied reports that terms of the arrangement had been changed during the translation process, and reiterated the Trump administration's position that China has agreed to increase U.S. imports by $200 billion over the next two years, including agricultural productions worth between $40 and $50 billion. 

"The language will be released this week and people can see this is a very, very extensive agreement," Mnuchin said.

The signing ceremony will fall smack in the middle of the most active week to date for the fourth quarter earnings season, with 26 companies set to report, including major Wall Street banks such as Citigroup  (C) - Get Report, Goldman Sachs  (GS) - Get Report, JPMorgan  (JPM) - Get Report, Morgan Stanley  (MS) - Get Report and Wells Fargo  (WFC) - Get Report.

Collectively, S&P 500 companies are expected to see earnings slip by 0.6% when compared to the same period last year, a figure that translates to share-weighted earnings of £333.3 billion.

Heading into the Monday session, futures contracts tied to the Dow Jones Industrial Average, which shed around 133 points on Friday after topping the 29,000 barrier for the first time on record, are priced for a 105 point move higher while those linked to the S&P 500 suggest an 11 point gain for the broader benchmark. 

European shares showed improvement through the morning session in Frankfurt as investors adopted a cautious stance ahead of the U.S. earnings season kick-off and monitored movements in currency markets, where the U.S. dollar gained ground against its global peers amid improving geopolitical sentiment and firming economic data.

The region-wide Stoxx 600 was marked 0.14% higher in the opening hours of trading while London's FTSE 100 added 0.6%, helped in party by a softer pound, which fell 0.3% to 1.2972 against the dollar following Sunday comments from a Bank of England official that hinted at near-term rate cuts and data showing flat economic growth for most of 2019. 

Overnight in Asia, Japan's Nikkei 225 was closed for its annual 'Coming of Age' holiday, sapping liquidity in currency and bond markets. Stocks, however, were able to extend gains on hopes that the U.S.-China trade agreement would spur activity between the world's two biggest economies, helping the region-wide MSCI ex-Japan benchmark to a 19-month high.

Global oil prices, however, eased modestly as the dollar added gains and investors continued to reduce crude pricing risk in the wake of ebbing military tensions between the U.S. and Iran following the January 3 killing of Major-General Qassem Soleimani and the Tehran-ordered missile strike on U.S. airbases in Iraq that followed.

Brent crude futures contracts for March delivery, the global benchmark for pricing, were last see seen 12 cents lower from their Friday close in New York and trading at $64.86 per barrel, while WTI contracts for February, which are more tightly-linked to U.S gasoline prices, were marked 7 cents lower at $58.97 per barrel.