Futures higher on trade optimism; inflation data awaited

March 29, 2019

By Shreyashi Sanyal

(Reuters) – U.S. stock index futures rose on Friday, the last trading day of the quarter, as the latest round of U.S.-China trade talks ended on a positive note and investors awaited inflation data.

U.S. Treasury Secretary Steven Mnuchin said he held “constructive” talks in Beijing, concluding the latest round of dialogue, which will be followed by a round in Washington next week.

Meanwhile, the benchmark 10-year Treasury yields has been inching higher after coming off its 15-month lows in the previous session as investors start adjusting to the dovish move by the global central banks.

Wall Street was rattled by fears of economic growth after the Federal Reserve abandoned projections for any interest rate hikes in 2019 and the U.S. Treasury yield curve inverted for the first time since 2007 last week.

Still, the benchmark S&P 500 index was set to post its best quarterly gain since September 2009.

The yield curve between three-month bills and 10-year notes remains inverted, and if it persists, it could indicate a recession is likely in one to two years. [US/]

A gradual rise in 10-year Treasury yields has lifted the shares of big lenders in premarket trading. JPMorgan Chase & Co, Bank of America and Goldman Sachs rose between 0.8 percent and 1 percent. For further clues on inflation, investors will keep a close watch on the Commerce Department’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge.

The report, due at 8:30 a.m. ET, will likely show consumer spending remained flat in January from the previous month.

At 7:15 a.m. ET, Dow e-minis were up 107 points, or 0.42 percent. S&P 500 e-minis were up 11.5 points, or 0.41 percent and Nasdaq 100 e-minis were up 34 points, or 0.46 percent.

GDP data on Thursday showed the domestic economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the 3 percent annual target, and corporate profits failed to rise for the first time in more than two years.

Wells Fargo was up 2 percent after it said Tim Sloan will resign immediately as chief executive, becoming the second CEO to leave the bank in the fallout of a wide-ranging sales practices scandal.

Gilead Science rose 2.8 percent after the drugmaker’s Belgian partner Galapagos said it had seen positive results from several trials of its arthritis drug.

DowDuPont fell 1.6 percent after two brokerages cut their price targets for the chemical company’s stock, citing bad weather and margin pressures.

A separate report at 10 a.m. ET, is expected to show new home sales having grown to 620,000 units in February, up from 607,000 units in January.

(Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)

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