Stock futures rise as Trump delays tariff hike on Chinese goods

February 25, 2019

By Shreyashi Sanyal

(Reuters) – U.S. stock index futures climbed on Monday, fueled by hopes of a resolution to a trade war between the United States and China after President Donald Trump said he would delay an increase in tariffs on Chinese goods.

Trump said the trade talks were “productive” and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

The announcement was the clearest sign yet that the two sides are closing in on a deal to end their prolonged trade spat, as Trump cited progress in divisive areas such as intellectual property protection, technology transfers, agriculture, services and currency.

Tariff-exposed companies such as Caterpillar Inc rose 1.5 percent and Boeing Co 0.8 percent, leading gains among the 21 Dow Jones Industrial Average stocks that were trading premarket.

Semiconductor companies, which also have a big exposure to China, traded higher with Micron Technology Inc, Advanced Micro Devices Inc and Intel Corp up between 0.8 percent and 2.3 percent.

Optimism on trade front and dovish signals from the Federal Reserve have bolstered U.S. stocks in recent weeks, with the S&P 500 index about 5 percent away from its record closing high it hit in late September.

The benchmark index closed up at its highest level in over three months on Friday.

At 7:03 a.m. ET, Dow e-minis were up 146 points, or 0.56 percent. S&P 500 e-minis were up 12 points, or 0.43 percent and Nasdaq 100 e-minis were up 42.5 points, or 0.6 percent.

General Electric Co jumped 8 percent after the industrial conglomerate said it would sell its biopharma business to Danaher Corp for $21.4 billion.

Newmont Mining Corp gained 1.3 percent after Canadian miner Barrick Gold Corp offered to buy the company in an $18 billion stock deal.

Warren Buffett’s Berkshire Hathaway Inc’s Class B shares fell 0.7 percent after the company reported a huge quarterly net loss, hurt by sinking stocks and deteriorating prospects from an investment in Kraft Heinz Co.

Looking ahead, investors will be keeping close watch on Fed Chair Jerome Powell who is set to testify on monetary policy and the economy on Tuesday and Wednesday.

The central bank said last month it would be “patient” with further rate hikes after markets swooned late in December on fears of an economic slowdown.

(Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; Editing by Anil D’Silva)

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