By Chris Matthews and Barbara Kollmeyer, MarketWatch
Huawei executive out on bail, Trump says he'll intervene if
needed
Stock index futures are pointing to a strong start to the
trading day Wednesday, after comments by President Donald Trump,
and bail for a jailed Huawei Technologies Co. executive
(http://www.marketwatch.com/story/huawei-cfo-meng-wanzhou-granted-bail-by-canadian-judge-2018-12-11),
revived optimism over trade negotiations between the U.S. and
China.
How are benchmarks trading?
Dow Jones Industrial Average futures rose 246 points, or 1%, to
24,668, while S&P 500 index futures rose 27 points, or 1%, to
2,668. Nasdaq-100 futures are up 84 points, or 1.3%, to 6,801.
In a volatile day of trading Tuesday, the Dow Jones Industrial
Average shed 53.02 points, or 0.2%, to 24,370.24 while the S&P
500 index slipped 0.94 point to 2,636.78 and the Nasdaq Composite
Index edged up 11.31 points, or 0.2%, to 7,031.83.
What's driving the markets?
Uncertainty over U.S.-China trade relations appear set to
dominate yet another trading session, as both Chinese officials and
the Trump administration have made a concerted effort to convince
markets that negotiations will soon bear fruit.
President Trump, in an interview with Reuters
(http://www.marketwatch.com/story/trump-says-hell-step-in-over-huawei-executive-if-needed-cites-progress-over-trade-2018-12-12),
said he would intervene in the arrest of Huawei's chief financial
officer Meng Wanzhou if it would help ensure a trade deal with
China. The executive was granted bail by a Canadian judge
(http://www.marketwatch.com/story/huawei-cfo-meng-wanzhou-granted-bail-by-canadian-judge-2018-12-11)
on Tuesday after more than a week in detention, but will be subject
to close monitoring. She was arrested Dec. 1 at the behest of U.S.
authorities and awaits possible extradition to the U.S., where she
faces charges related to allegations she lied to banks about the
company's ties to a firm that did business in Iran, in violation of
U.S. sanctions.
Those developments helped spur some relief buying as investors
have been carefully watching the arrest, which has angered China,
for signs it could scuttle a trade cease-fire brokered last month.
Tuesday reports that China will lower tariffs on U.S. autos
(http://www.marketwatch.com/story/china-to-slash-tariffs-on-us-auto-imports-to-15-2018-12-11)
also continued to support market optimism.
Traders will also continue to pay close attention to the ongoing
battle for market leadership. For the past three months, investors
have largely been signaling fear over the longevity of the current
expansion by rotating into the safety of utilities and consumer
staples--the two only two sectors gaining value during that
time.
This week has told a different story, with the tech stocks, as
measured by the Technology Select Sector SPDR Fund (XLK),
outperforming every other S&P 500 sector, giving hope to bulls
who argue that the U.S. economic expansion has enough strength and
stamina left to keep these firms growing rapidly for the
foreseeable future.
What are the strategists saying?
"U.S. futures are in a good mood, with the Huawei CFO released
on bail, and strong overnight action in Asia on constructive trade
[headlines]," Dave Lutz head of ETFs at JonesTrading wrote in a
Wednesday morning note.
Lutz pointed out that Nasdaq-100 futures are leading the market
higher in premarket in action, in what he describes as a
"broad-based" tech rally, suggesting that futures investors have
indeed been heartened by headlines late yesterday and early
Wednesday suggesting progress on U.S.-China trade talks.
What data are ahead?
The Labor Department will release a key indicator of inflation
at 8:30 a.m. Eastern, when it will announce November's reading of
the consumer price index, or CPI.
Economists polled by Marketwatch expected prices to stay flat
compared to October, but expect core prices to rise 0.2%, a measure
that eliminates volatile food and energy prices.
At 2 p.m. Eastern, the Treasury Department will announced the
size of the U.S. government's fiscal deficit for November, with the
consensus estimate being $175 billion, according to FactSet, an
increase from October's $139 billion shortfall.
How are other markets trading?
Asia markets saw hefty gains
(http://www.marketwatch.com/story/japan-hong-kong-lead-big-stock-rebound-in-asia-wednesday-2018-12-11)
on the Huawei developments, while the Stoxx Europe 600 index was
also in the black.
West Texas Intermediate crude futures climbed 2% to $52.70 a
barrel and Brent crude futures rose 1.8% to $61.28 a barrel after
the American Petroleum Institute reported late Tuesday
(http://www.marketwatch.com/story/api-data-reportedly-show-a-more-than-10-million-barrel-drop-in-us-crude-supplies-2018-12-11)that
U.S. crude supplies fell by a bigger-than-expected drop of 10.2
million barrels for the week ended Dec. 7.
The dollar slipped with the U.K. pound firmer after news Prime
Minister Theresa May will face a vote of confidence
(https://www.fnlondon.com/articles/theresa-may-to-face-vote-of-confidence-this-evening-20181212)
on Wednesday evening.
(END) Dow Jones Newswires
December 12, 2018 08:07 ET (13:07 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.