Futures gain as reports fuel trade deal hopes
Wall Street was set to rise for the first time in three sessions on Wednesday after latest media reports eased concerns over escalating trade tensions between the United States and China, ahead of highlevel trade talks starting Thursday.
China is still open to agreeing to a partial trade deal with the United States, Bloomberg reported, despite the inclusion of top Chinese artificial intelligence startups in a trade blacklist.
Separately, the Financial Times reported Beijing was offering to increase its annual purchases of U.S. agricultural products. Trade-sensitive chipmakers rose premarket. Nvidia Corp (NVDA.O), Intel Corp (INTC.O) and Advanced Micro Devices Inc (AMD.O) gained 1.5%, while Apple Inc (AAPL.O) was up 1.2%.
The reports offered some relief to investors after a turbulent start to October as a result of escalating trade tensions, intensifying efforts to impeach President Donald Trump and signs of slowing economic growth. Bets of a third interest rate cut by the Federal Reserve have surged since last week after data showed a sharp contraction in U.S. manufacturing and a dismal reading on business activity.
Earlier, Fed Chair Jerome Powell flagged openness to further rate cuts, repeating that the central bank will act "as appropriate" amid an economy that he said was likely to continue to expand.
Investors are now focused on the third-quarter earnings season, with analysts expecting the worst quarterly profit performance since 2016.
Earnings for S&P 500 companies are forecast to fall nearly 3% from a year earlier, based on IBES data from Refinitiv.
At 7:21 a.m. ET, Dow e-minis 1YMcv1 were up 205 points, or 0.78%. S&P 500 e-minis EScv1 were up 26.5 points, or 0.92% and Nasdaq 100 e-minis NQcv1 were up 76.75 points, or 1.01%.
Johnson & Johnson (JNJ.N) fell 2.2% after a Philadelphia jury said the company must pay $8 billion to a man over his claims that it failed to warn that young men using its antipsychotic drug Risperdal could grow breasts.
PayPal Holdings Inc (PYPL.O) dropped 1.3% after the digital money transfer company said it expected a pre-tax loss of $228 million during its third quarter. U.S.-listed Chinese stocks gained after falling in the previous session, with Alibaba Group Holding Ltd (BABA.N), JD.com Inc (JD.O) and Baidu Inc (BIDU.O) up between 1.5% and 1.7%.
Meanwhile, copper held steady on Wednesday before high-level talks between China and the United States but low expectations for a swift end to their prolonged trade dispute kept prices under pressure. Benchmark copper on the London Metal Exchange traded up 0.3% to $5,691 a tonne in official rings.
Prices of the metal used widely in power and construction fell to $5,518 early last month, the lowest since May 2017 on concern about demand in top consumer China. "Trade talks will drive direction in the short term ... Some of the signals yesterday were not particularly encouraging," said Deutsche Bank analyst Nick Snowdon.
"The macro picture will be the most important determinant, but we are seeing a tighter physical market in China, which will support prices," he said. TRADE: U.S. and Chinese officials are due to talk on Thursday and Friday in a bid to end a 15-month long trade dispute. But hopes of a resolution appeared low due to Washington imposing visa restrictions on Chinese officials for the detention or abuse of Muslim minorities.
CHINA: A tighter copper market can be seen in bonded copper stocks in Shanghai, which at 290,000 tonnes are down from 600,000 tonnes in March and at their lowest since late 2011, Deutsche's Snowdon said.