The Monday Market Minute

  • Global stocks extend gains after China's central bank cuts a key interest rate and state-backed media reports "constructive" U.S.-China trade talks.
  • The PBOC cuts its seven-day reverse repo rate for the first time since 2015, easing liquidity conditions for the nation's banks heading into the final months of the year.
  • European stocks open near fresh four-year highs following solid gains in Asia, while Wall Street braces for a key series of consumer-focused earnings after weaker-than-expected October retail sales data last week.
  • Global oil prices drift past seven-week highs ahead of likely OPEC production cuts at next month's cartel meeting in Vienna.
  • Wall Street futures suggest modest gains, and more record highs, ahead of today's opening bell, with retail earnings, Fed minutes and housing data on tap for the remainder of the week.

Market Snapshot

Wall Street futures edged higher Monday, while global stocks recorded firm gains across the board, as investors extended bets on a near-term U.S.-China trade deal and reacted to a rare rate cut from from Beijing that lifted Asia markets.

The People's Bank of China lowered one of its key interest rates for the first time since 2015 -- a reverse repo charge that allows for seven-day liquidity in the bank market -- by 5 basis points Monday in a move some analysts have said could signal further easing in the slowing economy.

The move followed weekend comments from state-backed media outlet Xinhua, which reported "constructive" trade talks between Washington and Beijing over the weekend that raise the hopes of at least an interim agreement on tariffs and agricultural purchases between the world's two biggest economies.

Regional gains were capped, however, and global market sentiment was muted by further violence in Hong Kong, where police fired rubber bullets and tear gas at protesters holed-up in the city's Polytechnic University after another weekend of clashes with police over alleged meddling from officials in Beijing.

Wall Street futures look set for a solid start to the week on the back of the trade optimism, although investors will navigate both a key series of consumer  sector earnings following weaker-than-expected retail sales for the month of October last week, with third quarter updates from Home Depot (HD) - Get Report , Target (TGT) - Get Report , Macy's (M) - Get Report , Kohl's (KSS) - Get Report and Nordstrom (JWN) - Get Report .

Contracts tied to the Dow Jones Industrial Average, which has gained just over 20% so far this year and cracked the 28,000 barrier late Friday, are priced for a 67-point opening bell gain while those linked to the S&P 500, which has outpaced the Dow with a 24.5% gain, are set for a 5 point gain that would take the broadest benchmark of U.S. shares to a fresh record high.

European stocks were also firmer in London and Frankfurt, with the Stoxx 600 rising 0.17% to lift the benchmark to within touching distance of a fresh four-year high and Britain's FTSE 100 rising 0.26% to the upside even as the strong pound held down gains for the U.K.'s internationally-focused index.

Asia stocks, too, looked traded comfortably in the green Monday following the PBOC rate cut and the comforting comments on trade, with Japan's Nikkei 225 rising 0.49% to a near 13-month high of 23,416.76 points and the region-wide Asia ex-Japan benchmark seen 0.42% higher into the final hours of trading.

Away from equities, the U.S. dollar index was marked modestly lower against a basket of its global peers Monday heading into this week's publication of minutes of the Federal Reserve's last interest-rate setting meeting on October 31, although bets are bets on 2020 rate cuts are starting to accelerate after last week's weak retail sales data and the steepest month-on-month decline in industrial output in nearly a decade.

Global oil prices used the weaker dollar, as well as the chances of extended OPEC production cuts from the cartel's December meeting in Vienna next month, to extend gains from last week's rally that lifted crude to a seven-week higher, even as both the IEA and OPEC officials themselves cut 2020 demand targets amid slowing economic growth.

Brent crude contracts for January delivery, the global benchmark, were seen 10 cents higher from their Friday close and trading at $63.39 per barrel, while WTI contracts for December were marked 18 cents higher at $57.90 per barrel.