Stock Exchanges: Stocks Rise on US-China Trade Deal Hopes

On Wednesday, stocks ended higher as the market applauded a nearing U.S- China trade deal. However, softer measures on payrolls and the service economy kept a lid on optimism.

U.S- China relations profoundly affect chipmakers leading to a higher tech sector. The VanEck Vectors Semiconductor ETF (SHM) climbed 2.3%. Advanced Micro Devices (AMD) was leading with a surge of 8.5%. AMD jumped after Nomura Instinet coverage of the stock with a buy rating, citing the company’s improving profitability.

The Dow climbed 39 points as Intel, and Home Depot outperformed. The S&P 500 gained 0.2%, notching a five-day winning streak, as the materials and tech sectors led the way. The Nasdaq advanced 0.6%.

U.S and China officials are said to have resolved the outstanding disputes and about to close a deal. Both have levied tariffs on billions of dollars’ worth of each other’s goods since last year.

According to the Financial Times, China wants America to remove the existing U.S duties on Chinese imports. Trump administration wants China to agree to enforcement measures that ensure China sticks to the deal.

Robert Lighthizer- U.S Trade representative, Steven Mnuchin- Treasury Secretary and Chinese Vice Premier, Liu He will resume talks later.

European stocks rose broadly as the Stoxx 600 index gained 1% in Asia. The Shanghai Composite surged 1.2%. The Japanese and Korean Kospi indexes both rose around 1%.

However, weaker-than-expected economic data kept gains in check.

Growth in services fell more than expected in March and advanced at its slowest pace in more than 12 months. The Institute for Supply Management reported (ISM). ISM non-manufacturing index dipped to 56.1 last month. It was its softest read since Aug 2017.

According to ADP and Moody’s Analytics, private payrolls increased by 129,000 in March. It was below a definitive estimate of 173,000.

A bearish call on Caterpillar shares also kept market gains in check. Caterpillar shares fell 0.7% after Deutsche Bank downgraded the industrial giant to hold from buying and slashed its 12-month price target. The bank cited a “collapse” in synchronised global growth.

Stock Exchanges: U.S Futures rise on upbeat China and Europe data

On Wednesday, U.S futures rose as upbeat Chinese and European data helped ease fears of a protracted slowdown in the global economy.

In China, the Caixin Services purchasing managers’ index rose to a 14-month high. The rise hinted at stabilisation in the world’s second-largest economy. In Europe, the Eurozone services PMI hit its highest rate since December.

Dow futures rose 110 points or 0.4%, S&P 500 futures gained 14 points or 0.5% and tech heavy Nasdaq 100 futures rose 41 points or 5%.

The U.S. and China have resolved most of their issues, but still, have differences over the fate of existing U.S. tariffs and enforcement mechanisms to ensure that the deal is adhered to.

“90% of the deal is done, but the last 10% is the hardest part, it’s the trickiest part, and it will require trade-offs on both sides,” said Myron Brilliant, executive vice-president for international affairs at the U.S. Chamber of Commerce.

In commodities, gold futures inched up 0.1% to $1,297.25 a troy ounce, while crude oil gained 0.2% to $62.70 a barrel. The U.S. dollar index, which measures the greenback against a basket of six major currencies, fell 0.4% to 96.57.