U.S. Futures Rise as Investors Assess U.S.-China Tensions

(Bloomberg) -- After a deep selloff in U.S. stocks on Friday, U.S. equity-index futures pointed to a higher open as investors assess President Donald Trump’s order for a review of more tariffs that prompted an aggressive response from China.

Futures on the S&P 500 Index advanced as much as 0.8 percent Monday after all major U.S. equity indexes on the cash market ended last week in the red as data showed March payrolls were cooler than economists forecast. Contracts on the Nasdaq 100 rose as much as 1 percent, while those on the Dow Jones Industrial Average gained 0.9 percent.

“After having the weekend to digest the fallout in equity markets, I think there could have been a possible overshoot on the S&P: it’s probably magnified by the U.S. jobs report that came in weaker than expected,” Stephen Innes, head of trading for Asia Pacific at Oanda Corp., said by phone. The jobs report “wasn’t as bad as what it alluded to, given the weather factors on the Northeast,” he added.

U.S. Futures Rise as Investors Assess U.S.-China Tensions

Larry Kudlow, the president’s top economic adviser said Friday the U.S. and China are holding “back-channel discussions” to resolve an escalating trade dispute that has unsettled global financial markets. “President Xi and I will always be friends, no matter what happens with our dispute on trade,” Trump said in a tweet on Sunday.

In a new development Monday, China is said to be evaluating the potential impact of a gradual yuan depreciation. One part of the analysis looks at the effect of using the currency as a tool in trade negotiations with the U.S., while a second part examines what would happen if China depreciates the yuan to offset the impact of any trade deal that curbs exports.

Investors may also be turning their attention to the upcoming earnings season. “S&P 500 companies will begin reporting first-quarter results with many investors hoping that earnings and forward guidance can bolster the struggling equity market, ” Citi Chief U.S. Equity Strategist Tobias Levkovich said in note. Biotech stocks may get a boost in U.S. trading today after Novartis AG agreed to acquire AveXis Inc. for $8.7 billion.

POLITICS/ECONOMY

  • President Xi Jinping is among senior officials scheduled to speak at China’s Boao Forum Tuesday
  • John Bolton takes office as President Trump’s national security adviser replacing H.R. McMaster ahead of major foreign policy events including a U.S. meeting with North Korea, which once called Bolton “human scum”
  • Christian Sewing was named to succeed to Briton John Cryan as CEO of Deutsche Bank at a meeting of the bank’s supervisory board late Sunday.
  • ECB Executive Board member Peter Praet participates in a meeting of the European Finance Forum in Frankfurt, while Vice President Vitor Constancio presents the bank’s annual report in Brussels

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