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U.S. stock futures drifted higher Friday after Chinese President Xi Jinping said his government is working toward a “phase one” trade agreement with the U.S., prompting cautious optimism that negotiations between the world’s two biggest economies may advance.
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Futures linked to the Dow Jones Industrial Average ticked up less than 0.1%, signaling a possible end to three consecutive days of declines in the gauge of blue-chip stocks. That followed a mixed performance in Asian markets, where Hong Kong’s Hang Seng Index ended the day up 0.5% and the Shanghai Composite gauge finished 0.6% lower.
Mr. Xi said Friday that his country has “been working actively to try not to have a trade war,” according to reports from Reuters and Bloomberg on comments made at an international forum in Beijing. China wants to work toward an initial deal on the basis of “mutual respect and equality,” he said in a rare set of remarks about the trade negotiations, which have weighed on global markets for much of this year.
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The comments led to some speculation that the U.S. and China may work toward striking an initial trade deal early next year. Investors are reconciling themselves to an accord not materializing by the end of 2019 after conflicting signals on the progress of the negotiations this week dampened market sentiment and weighed on global stocks.
“It’s clear cut that a deal can help China,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers. “Under the hood, we can see the damage being done to its economy. In the U.S., it’s trickier because it’s an election year.”
Ahead of the opening bell, shares in Nordstrom jumped over 7% in offhours trading after the department-store chain’s third-quarter profit beat Wall Street’s expectations.
Meanwhile, European markets had a mixed reaction to German and French industrial survey data that proved to be better than expected for November.
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For the eurozone as a whole, monthly manufacturing activity showed an improvement from October and beat the market’s expectations, buoying investor sentiment. Stocks rose, with the pan-continental Stoxx Europe 600 index advancing 0.4%, but bond yields falling.
Germany’s equity benchmark, the Dax index, gave up initial gains and traded mostly flat. Indicators on the nation’s manufacturing and services sectors for November were stronger than expected, although both continue to signal contractions. At the same time, Germany’s economy returned to growth in the third quarter, meeting expectations for a 0.1% expansion.
Government bond yields fell in Europe with German 10-year bund rates sliding to minus 0.351% from minus 0.336%. French, Italian and other major European government bond yields also slipped. The euro was mostly flat against the dollar, trading at $1.106.
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Elsewhere in markets, gold advanced 0.6% higher to $1,472.10 a troy ounce.
Later in the day, the University of Michigan’s final consumer sentiment index for November will provide an indication on whether Americans’ outlook has dimmed from earlier in the month.
