Monday November 18th


Dow set to continue record run above 28,000 after report of ‘constructive’ US-China trade talks

U.S. stock index futures pointed to new record highs on Monday after Chinese state media said recent trade talks between China and the U.S. were positive. Dow Jones Industrial Average futures were up 75 points at around 7:05 a.m., indicating a gain of 53 points at the open. S&P 500 and Nasdaq 100 futures also indicated a higher open. At this rate, the Dow would build on Friday’s record close above 28,000. “The stock market has shown remarkable resiliency,” Robert Pavlik, chief investment strategist at SlateStone Wealth, said in a note. “What is more remarkable is that the issues that the market has been dealing with since the start of the year haven’t dissipated but have been grown or become more complicated.” Pavlik pointed out that the U.S.-China trade conflict, which began last year, remains an overhang for the market while corporate earnings have not improved and economic news has “weakened.” However, Chinese state media said over the weekend China and the U.S. has “constructive” trade talks, noting U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin talked with Chinese Vice Premier Liu He about the core issues for a phase one trade agreement.  “More than in previous rounds, we see momentum toward reaching at least a limited trade deal, and certainly a mini-deal would remove some of the negative sentiment overhang for the real economy and markets,” said Patrik Schowitz, global multi-asset strategist at J.P. Morgan Asset Management. “We have upgraded our outlook on equities as an asset class,” he added. “Emerging market equities are now our most favored region alongside U.S. large cap equities.” The so-called phase one deal was announced last month and is expected to be signed sometime this month. The optimism around that agreement, coupled with easier monetary policy from the Federal Reserve, helped spark the stock market’s rally to record highs. Over the past month, the Dow and S&P 500 are both up more than 4%. The Nasdaq, meanwhile, is up 5.6% in that time through Friday’s close. On the data front, there will be business leaders survey figures out at 8:30 a.m. ET, the National Association of Home Builders survey is due at 10 a.m. Stocks in Asia were mostly higher on Monday as investors looked for further developments on U.S.-China trade. Mainland Chinese stocks closed higher, with the Shanghai composite up 0.62% to about 2,909.20 and the Shenzhen composite gaining 0.715% to approximately 1,617.19. The Shenzhen component also advanced 0.7% to 9,715.27. Hong Kong’s Hang Seng index rose 1.35% to close at 26,681.09. Elsewhere, Japan’s Nikkei 225 added 0.49% to close at 23,416.76 while the Topix index gained 0.24% to end its trading day at 1,700.72. South Korea’s Kospi, on the other hand, slipped slightly to close at 2,160.69. Oil prices moved lower on Monday, with investors awaiting fresh clues over prospects for a trade deal between the United States and China and shrugging off concerns over steadily rising oil supplies. Brent crude futures fell 18 cents, or 0.3%, to $63.12 a barrel. The contract rose 1.3% last week. West Texas Intermediate (WTI) crude futures fell 15 cents, or 0.3%, to $57.57. Gold fell on Monday as growing optimism for a U.S.-China trade deal following a report of “constructive talks” over the weekend boosted sentiment for riskier assets. Spot gold fell 0.6% to $1,458.50 per ounce, while U.S. gold futures were down 0.6% to $1,459.10.