U.S. Equity Futures Rally as Xi Backs Free Trade in Speech

(Bloomberg) -- U.S. stock-index futures extended gains after China’s President Xi Jinping reiterated pledges to open sectors from banking to auto manufacturing in a keynote address at the Boao Forum in Asia.

Futures contracts on the S&P 500 Index gained as much as 1.5 percent after Xi said China is moving forward on economic globalization. Nasdaq 100 futures increased as much as 2 percent, while those on the Dow Jones Industrial Average climbed 1.5 percent.

“China is not interested in a trade war for sure, but the U.S. is not bluffing either,” Hans Goetti, founder of HG Research, said by phone from Singapore. “The truth is that the U.S. wants to come out on top of this, but I do know at some point there would be negotiations.”

The Stoxx Europe 600 Index followed shares from Sydney to Hong Kong higher after Xi said China will increase transparency, strengthen property-rights protection and oppose monopolies, and added that the nation will reduce tariffs on vehicles. President Donald Trump expressed optimism Monday that the U.S. will be able to reach a deal with China, while the Fed’s Robert Kaplan said trade issues between the two superpowers won’t get resolved soon and warned of potential damage if the dispute is prolonged.

“Markets will welcome this rational, measured response from President Xi,” said Ben Kwong, executive director in Hong Kong at KGI Asia Ltd. “By emphasizing that China will seek cooperation with other countries to achieve a win-win solution, Xi is projecting himself as the gentleman here.”

POLITICS/ECONOMY:

• Facebook Inc. Chief Executive Officer Mark Zuckerberg testifies at two Congressional hearings Tuesday and Wednesday
• President Trump condemned as “disgraceful” an FBI raid on the office and hotel room of his longtime lawyer Michael Cohen reviving fears he might fire Special Counsel Robert Mueller
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To contact the reporters on this story: Choong En Han in Kuala Lumpur at echoong6@bloomberg.net, Sofia Horta e Costa in Hong Kong at shortaecosta@bloomberg.net, Gabriella Lovas in Budapest at glovas2@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Brian Lysaght

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