Wednesday June 26th

26-06-2019

Stock futures jump after Mnuchin says ‘there’s a path’ to complete trade deal

U.S. stock index futures jumped Wednesday morning after Treasury Secretary Steven Mnuchin told CNBC that the U.S. and China were close to reaching a trade deal. At around 7:08 a.m. ET, Dow Jones Industrial Average futures rose 110 points, indicating a gain of more than 116 points at the open. S&P 500 and Nasdaq 100 also traded higher. “We were about 90% of the way there (with a deal) and I think there’s a path to complete this,” Mnuchin told CNBC’s Hadley Gamble on Wednesday, without providing detail on what the final 10% of an agreement might entail. He said he’s confident President Donald Trump and Chinese President Xi Jinping can make progress in stalled trade talks at the forthcoming Group of 20 (G-20) meeting this weekend. Trade tensions between the world’s largest economies intensified last month after the U.S. hiked tariffs on billions of dollars worth of Chinese imports. China retaliated with tariffs of its own.  Those fears dissipated in June after Trump said he and Xi agreed to meet at the G-20, stoking hope of trade progress between the two countries. Wall Street saw its worst day of June on Tuesday on the back of comments from Federal Reserve officials. Fed Chair Jerome Powell Tuesday said the central bank is assessing whether the U.S. economy is calling for lower rates. However, Powell also said that the Fed will take a wait-and-see approach given how rapid recent economic changes have been. Earlier on Tuesday, James Bullard, president of the St. Louis Fed, downplayed prospects of a rate cut. Market expectations point to a rate cut in July. Investors are betting the Fed will cut rates by at least 25 basis points in July. Those expectations helped lift the major stock indexes this month. The Dow and S&P 500 were both up at least 6% for June entering Wednesday’s session. The Nasdaq was up 5.8%. In corporate news, Micron shares shot up 8% in the premarket after the chipmaker said it could “lawfully resume ” shipments to Chinese telecom giant Huawei. The stock also got a boost from better-than-expected quarterly results.New orders for key U.S.-made capital goods rose more than expected in May and shipments increased solidly, suggesting some stabilizing in business spending on equipment after it fell early in the year. The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month amid increases in demand for machinery, and computers and electronic products. These so-called core capital goods orders dropped by an unrevised 1.0% in April. Economists polled by Reuters had forecast core capital goods orders edging up 0.1% in May. Core capital goods orders rose 2.3% on a year-on-year basis. Stocks in Asia were subdued on Wednesday after U.S. Federal Reserve Chairman Jerome Powell tempered expectations for a potential interest rate cut. The Nikkei 225 in Japan declined 0.51% to close at 21,086.59. The Topix index fell 0.59% to finish its trading day at 1,534.34. In South Korea, the Kospi closed just above the flat line at 2,121.85. Mainland Chinese shares struggled for gains on the day. The Shanghaicomposite was down 0.19% to 2,976.28, while the Shenzhen composite was largely flat at 1,560.51. The Shenzhen component, meanwhile, rose fractionally to 9,122.43. In Hong Kong, the Hang Seng index was slightly higher, as of its final hour of trading. Oil prices rose on Wednesday, buoyed by an outage at a major refinery on the U.S. East Coast and industry data that showed U.S. crude stockpiles fell more than expected. Front-month Brent crude futures, the international benchmark, were up 82 cents at $65.87 per barrel. They earlier touched their highest since May 31 at $66.25 a barrel. U.S. West Texas Intermediate (WTI) crude futures were at $58.95 per barrel, up $1.12 from their last settlement. WTI earlier hit its highest level since May 30 at $59.13 a barrel. Gold fell more than 1% on Wednesday, retreating from a 6-year peak scaled in the previous session, on signs the U.S. Federal Reserve will not resort to aggressive interest rate cuts in July. Spot gold was down 1.3% at $1,404.31 per ounce on track to snap a six-session long winning streak. Gold prices hit their highest since May 14, 2013, at $1,438.63 on Tuesday. U.S. gold futures fell 0.85% to $1,406.9.