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Stocks - US Futures Point Higher as China Cuts Tariffs

Stock MarketsFeb 06, 2020 07:07AM ET
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By Peter Nurse - U.S. stocks are set to open higher Thursday, building on record closing levels, helped by a combination of solid economic data and positive trade news out of China.

At 7:00 AM ET (1200 GMT), futures for the S&P 500 traded 14 points, or 0.4%, higher, futures for the Nasdaq were up 50 points, or 0.5%, while the Dow Jones futures contract rose 136 points, or 0.5%.

The S&P 500 cash index closed in record territory Wednesday, as did the Nasdaq Composite, while the Dow Jones Industrial Average ended comfortably above the 29,000 level, within striking distance of the record closing high of 29,340.10, hit on Jan. 17.

Overnight, China announced plans to cut in half tariffs on $75 billion worth of US imports in a bid to improve Sino-U.S. trading relations. This will come into effect on Feb. 14, when the U.S. will do something similar on $120 billion worth of Chinese imports.

This move is seen improving negotiating conditions between the two countries for a 'phase 2' deal to follow the interim deal announced last month - although that is widely seen as too complex to complete this year.

More healthy economic data emerged late Wednesday, helping the tone Thursday, as private jobs increased more than expected last month and services activity, which makes up more than two-thirds of economic growth, topped economists' forecasts.

With the U.S. economy seemingly on solid footing, the Federal Reserve remaining accommodative in nature, political uncertainty diminishing with the acquittal of President Donald Trump at his impeachment trial, and the Chinese authorities doing all they can to contain the coronavirus, stock markets are pointing ever higher.

In the corporate spotlight, Twitter (NYSE:TWTR) reported a miss in its earnings per share numbers, but its revenue came in above $1 billion, more than expected. Investors will also be looking for any progress fixing the bug that affected targeting ads that plagued its last earnings report. Shares rose over 2% premarket.

Bristol-Myers Squibb (NYSE:BMY) reported fourth-quarter earnings and revenue that topped expectations, while the day’s earnings roster also includes Philip Morris (NYSE:PM). Uber (NYSE:UBER) will report its latest numbers after the close, with analysts looking for the ride-hailing company to report a loss of 67 cents per share and revenue of about $4 billion.

Shares in Qualcomm (NASDAQ:QCOM) traded lower premarket after the chip maker said revenue rose 5% in its first fiscal quarter, better than expected, but issued a cautious outlook citing the impact from the coronavirus outbreak.

Also of note is Casper Sleep, which will start trading on the New York Stock Exchange after pricing its IPO at a valuation down sharply from its last private funding round.

The online bedding retail company priced its IPO at $12 per share, raising $100.8 million. That was the low end of the $12 to $13 expected range, a range that had already been lowered from $17 to $19 per share.

The day’s main economic release is the weekly initial jobless claims figure. This comes after Wednesday’s strong ADP (NASDAQ:ADP) nonfarm employment number and ahead of Friday’s key official employment report.

Elsewhere, an OPEC+ committee recommended a production cut of 600,000 barrels a day to offset the demand impact from the coronavirus outbreak, but there was no agreement on if ministers from OPEC and its allies should meet this month to ratify the Joint Technical Committee’s suggestion as Russia asked for more time to assess the impact of the outbreak.

That comes among growing signs of demand destruction in the Chinese energy complex. CNOOC, the country's biggest gas buyer, has declared force majeure to get out of taking delivery of contracted volumes of LNG, Reuters and Bloomberg reported, citing unnamed sources. Natural gas futures fell 1.1%.

AT 07:05 AM ET (1205 GMT), U.S. crude futures traded 1.2% higher at $51.36 and the international benchmark Brent contract rose 0.5% to $55.57.

Stocks - US Futures Point Higher as China Cuts Tariffs

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