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The Friday Market Minute

  • Global stocks trade firmly higher Friday on upbeat comments from a key White House adviser on U.S.-China trade talks and a move to boost the weighting of China shares in major equity market indices.
  • Global oil prices test fresh multi-month highs as supply constraints linked to U.S. sanctions and OPEC production cuts offsets record domestic output.
  • U.S. equity futures suggest solid gains on Wall Street ahead key December inflation data and earnings from Footlocker.

Market Snapshot

Global stocks traded firmly higher Friday, boosted by a move from one of the market's biggest index providers to increase the weighting of China stocks on world benchmarks and bullish comments on trade talks between Washington and Beijing from one of President Donald Trump's top advisers.

MSCI, which compiles equity market benchmarks for markets around the world, will quadruple the weighting of China-listed shares, taking them from around 0.7% of the key emerging markets index to around 3.3%, between now and November. The provider says the move could unlock fresh investor inflows of around $80 billion as fund managers move to re-balance portfolios around the new benchmarks.

Stocks were given a further boost through comment from White House economic adviser Larry Kudlow, who told TheStreet's founder Jim Cramer on CNBC Thursday that their was "fantastic" progress in U.S.-China trade last week, thanks in part to Trade Representative Robert Lighthizer reading "the riot act" to Chinese officials."

"We are heading towards a remarkable, historic deal," Kudlow predicted. "The documents are very clear: I mean, even things like the currency deal ... no manipulation; they've got to report any interventions in the market."

China's CSI 300 gained 2.2% Friday, capping its best week in more than three years, while the region-wide MSCI Asia ex-Japan index bumped 0.32% higher and Japan's Nikkei 225 closed out Friday with a 1.02 advance that was largely driven by a weaker yen.

U.S. equity futures are also pointing to solid gains on Wall Street Friday, with contracts tied to the Dow Jones Industrial Average I:DJI suggesting a 175 point gain for the 30-stock average and those linked to the S&P 500 undefined indicating a 17 point advance for the broader benchmark.

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Tesla Inc. (TSLA) - Get Tesla Inc Report shares were and early market mover, falling 4.2% in pre-market trading after founder and CEO Elon Musk said a move to offer a cut-down version of its flagship Model 3 sedan will likely result in a first quarter loss, only weeks after telling investors he would turn the clean energy carmaker into the black.

Foot Locker Inc. (FL) - Get Foot Locker, Inc. Report  shares surged more than 16% after the athletic shoe and clothing retailer posted stronger-than-expected fourth quarter earnings and same-store sales Friday and said it sees double-digit profit growth in the coming year.

Gap Inc. (GPS) - Get Gap, Inc. Report shares are set to open at a six-month high Friday after the clothing retailer said it would close more than half of its Gap-branded stores and spin off its Old Navy division into a standalone business by 2020.

European stocks were off to a firm start at the open Friday, as well, with the Stoxx 600 rising 0.64% in Frankfurt, lead by auto and basic resource stocks on U.S.-China trade optimism. Britain's FTSE 100 was also marked 0.5% higher, while Germany's DAX global trade-sensitive index paced the market with a 1.09% gain. 

A stronger-than-expected reading for U.S. fourth quarter GDP yesterday of 2.6%, which lifted the 2018 tally to 2.9%, fulled gains for the U.S. dollar, which was marked 0.2% higher against a basket of its global peers at 96.34 points, and pushed 10-year U.S. Treasury bond yields to 2.72%. 

The dollar's gains, however, failed to put a cap on oil prices, which tested multi-month highs again Friday as traders cited the impact of U.S. sanctions on Venezuela, which have reduced that country's oil exports by 40% to 920,000 barrels per day, and OPEC lead production cuts, which are removing 1.2 million barrels from the market each day.

Brent crude contracts for April delivery, the global benchmark, were marked 7 cents higher from their Thursday close and changing hands at $66.38 per barrel while WTI contracts for the same month were seen 22 cents higher at $57.44 per barrel.