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US open: Solid start to trading as US and China agree to roll back tariffs

By Iain Gilbert

Date: Thursday 07 Nov 2019

US open: Solid start to trading as US and China agree to roll back tariffs

(Sharecast News) - US stocks opened higher on Thursday as Beijing and Washington agreed to roll back tariffs on each other's goods as part of an effort to secure a phase-one trade deal.
As of 1530 BST, the Dow Jones Industrial Average was up 0.77% at 27,704.32, while the S&P 500 was trading 0.59% stronger at 3,094.84 and the Nasdaq Composite started out the session 0.69% firmer at 8,468.58.

The Dow opened 211.76 higher on Thursday after closing flat during the previous session following reports that an initial trade deal between Washington and Beijing could be delayed until December.

However, risk sentiment got a boost on Thursday after a spokesman for China's Ministry of Commerce said that top negotiators from both sides had held serious, constructive discussions and agreed to remove additional tariffs in phases as progress was made on the agreement.

"If China, US reach a phase-one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously based on the content of the agreement, which is an important condition for reaching the agreement," said spokesman Gao Feng.

IG analyst Josh Mahony said: "While a final deal could be signed in December rather than November, the plan to begin rolling back tariffs across the phases does show that we are finally seeing light at the end of the tunnel.

"Unlike the promise of higher agricultural purchases by the Chinese, a rollback in tariffs from each side would be much more positive for the wider economy and less likely to falter due to non-conformity of the agreement."

Elsewhere, market participants were also digesting news that the Bank of England held off from any policy changes at its meeting on Thursday, but two members of its Monetary Policy Committee unexpectedly broke ranks and voted for a cut in Bank Rate.

There was unanimity on the MPC however when it came to maintaining the stock of its purchases of Gilts and corporates bonds at £435.0bn and £10.0bn, respectively.

On the US data front, initial jobless claims fell by more than expected over the course of the preceding week.

According to the Department of Labor, initial jobless claims fell by 8,000 over the week ending on 2 November to reach 211,000. The consensus forecast had been for a reading 215,000, while the previous week's reading was revised up by 1,000.

Consumer credit figures for September will follow at 2000 BST, while Dallas Fed President Robert Kaplan will deliver a speech at 1805 BST.

In corporate news, Discovery shares climbed 6.18% after reporting a 3% revenue growth for the third quarter and outlining plans for making its US content more widely available on a streaming platform.

Ralph Lauren shot up 12.56% after its quarterly earnings topped forecasts, while Johnson Controls shares were broadly flat after coming in ahead of its own estimates.

Booking, Disney and Activision will all publish their latest quarterly earnings figures after the close on Thursday.

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