Stock Futures Edge Higher Cheering US-Sino Phase 1 Trade Deal

Equities

Major US stock-index futures soared to another record high, as China and the United States signed the first phase of the trade deal. China has agreed to buy an additional $200 billion of US goods over the next two years. On top of the $186 billion worth of the US goods and services bought by China in 2017, China will buy $77 billion in 2020 and $123 billion in 2021, where the total US exports to China will be at $263 billion and $309 billion in 2020 and 2021, respectively. The United States suspended tariffs on $160 billion of Chinese goods that were to take place in December, lowered tariffs on $120 billion of goods from 15% to 7.5%, and kept 25% of tariffs on $250 billion worth of goods until reaching the second phase of the trade deal. The Dow Jones Industrial Average futures rose to 29090, the S&P500 futures advanced to 3299, while Nasdaq remained short from logging a fresh record and traded at a high of 9096.

USD

The dollar index, which measures the greenback against a basket of major currencies, dipped to a one-week low of 97.16 on enhanced risk sentiment. The signing of the phase 1 trade deal between China and the United States lifted the demand for Asian currencies. Also, European currencies edged higher. On the data front, the producer price index rose by 0.1% only in December. The EURUSD inched higher to $1.1163, the GBPUSD recovered to $1.3057 despite soft inflation figures, and the AUDUSD and NZDUSD bounced-off the lows and rose to $0.6919 and $0.6640, respectively. Market participants are looking forward to December retail sales figures and November business inventories.

Metals

Gold prices settled higher as investors' were concerned about the trade deal between China and the United States. The United States kept the biggest chunk of tariffs on place, leaving 25% tariffs on $250 billion of Chinese goods until reaching the second phase of the trade deal. The price of a gold ounce hovered near $1555, the price of a silver ounce drifted lower to $17.90, while palladium extended gains to another record high of $2292.

Oil

Oil prices bounced off their lows supported by the US-China phase 1 trade deal and drop in US inventories. The US Energy Information Administration reported a drop of 2.549 million barrels last week but showed that the US production ticked higher to 13 million barrels per day from 12.9 previously. The West Texas Intermediate crude futures edged higher to $58.29, and Brent futures rose to $64.50.

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