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The Friday Market Minute

  • Global stocks book solid gains, pulling Wall Street futures higher, after a "very good" first day of U.S.-China trade talks in Washington.
  • Futures extend gains after Bloomberg report that China will remove cap on foreign ownership of domestic securities more quickly than anticipated.
  • President Donald Trump will meet China Vice Premier Liu He today in Washington, following a second session of negotiations that could lead to a breakthrough in the year-long dispute.
  • European stocks jump higher, lead by Germany's trade-sensitive DAX, while Britain's FTSE lags amid a surging pound amid hopes for a "pathway" to a near-term Brexit deal.
  • Oil prices surge amid reports of explosion on an Iranian oil taker, as well as OPEC comments on production cuts and renewed trade talk hopes.
  • US equity futures suggest a solid open on Wall Street ahead of export and import price data at 8:30 am Eastern time.

Market Snapshot

Wall Street futures traded firmly higher Friday, while global stocks booked solid gains as investors returned to risk markets, following reports of a better-than-expected day one meeting between U.S. and Chinese trade officials that could potentially unlock the year-long dispute between the world's two biggest economies.

President Donald Trump said he would meet with China's Vice Premier, Liu He, later today after a second round of talks at the U.S. Trade Representative office near the White House. Their sit-down would mark a substantial improvement in U.S.-China relations since an ad hoc agreement on trade and tariffs was agreed, and then abandoned, during the June G20 Summit in Japan.

"We just completed a negotiation with China, we're doing very well, we're having another one tomorrow," Trump told reporters in Washington before heading to a Republican rally in Minnesota. "I'm meeting with the vice premier over at the White House, and I think it's going really well. We're going to see them tomorrow, right here, and it's going very, very well."

While few details of the meeting, which included U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer,  analysts are suggesting the two sides could agree on easy-to-enact policies, such as currency manipulation and agricultural purchases, in order to engender goodwill for future negotiations on more complex topics and avoid a fresh round of tariff increases on $250 billion worth of China-made goods set for October 15.

The positive tone from the Thursday meeting both contrasted the hawkish headlines throughout the week, which included U.S. restrictions on visas for high-level diplomats and the blacklisting of 8 Chinese tech companies, and triggered a wave of pent-up risk appetite on Wall Street yesterday and in Asian markets this morning.

U.S. equity futures look set to follow-on with the bullish theme, with contracts tied to the Dow Jones Industrial Average indicating a 320 point opening bell gain and those linked to the S&P 500 guiding for a 35 point advance for the broader benchmark.

European stocks were also on the rise in early Frankfurt trading, with the Stoxx 600 benchmark gaining 1.5% by mid-day, lead by a 2% advance for Germany's trade-sensitive DAX performance index. 

Britain's FTSE 100, however, was only 0.32% higher as the pound extended gains from yesterday's bounce, the biggest since March, to trade at a three-month higher of 1.2644 against the dollar following a meeting between UK Prime Minister Boris Johnson and his Irish counterpart, Leo Varadkar, during which the two leaders said they may have found a "pathway" to a Brexit agreement before Britain's October 31 exit deadline.

Asia markets traded firmly higher, as well, with investors dumping safe-haven assets such as the U.S. dollar and the yen in favor of regional stocks, lifting the MSCI ex-Japan benchmark 1.23% higher heading into the close of trading and boosting the Nikkei 225 1.15% higher to close at 21.798.87 points.

Away from equities, the U.S. dollar extended its decline against a basket of six global currency peers, following on from yesterday's slump, to trade at 98.47 while benchmark 10-year Treasury bond yields were marked at 1.675%

Global oil prices were also marked firmly higher in the early Asia session, riding gains from both the hopes of a near-term U.S.-China trade deal and comments OPEC Secretary-General Mohammad Barkindo that the cartel may look to deeper production cuts at its December meeting in order to balance global crude markets, while making no changes to its 2020 demand growth forecasts.

Prices were also boosted by reports of an explosion on an Iranian oil tanker in the Saudi Arabian port of Jeddah, which state-television said was caused by a missile attack. 

Brent crude contracts for December delivery, the global benchmark, were seen 78 cents higher from Thursday's New York close to trade at $59.98 per barrel while WTI contracts for November delivery, which are more tightly linked with U.S. gasoline prices, were marked 84 cents higher at $54.39 per barrel.