U.S. equity futures edged higher in early Friday trading, while Treasury yields held at multi-week highs, as investors parsed details of a U.S.-UK trade agreement and looked to weekend talks with China that could potentially lead to a longer-term thaw in relations between the world’s two biggest economies.
Stocks ended higher across the board on Thursday, buoyed by a framework trade agreement between the U.S. and the UK that, while a positive move for the administration, fell far short of the “comprehensive” arrangement President Trump had earlier touted.
The President’s comments on China trade talks, which are set to begin with preliminary meetings this week in Switzerland, as well as his view that markets will rise once at deal is matched with Republican-lead tax cuts, added to the session’s overall gains.
Markets are riding a wave of optimism, with US stocks rallying Thursday on hopes of lower tariffs,” said Kevin Ford, FX and macro strategist at London-based Convera. “However, the baseline 10% tariff remains unchanged, signaling that double-digit tariffs are likely here to stay.”
President Trump said tax cuts and trade deals would turn the US into a “rocket ship that goes straight up.”
Image source: Win McNamee/Getty Images
Treasury bond yields, however, moved firmly higher following a weaker-than-expected auction of $25 billion in new 30-year paper, which drew muted overseas interest and commanded a higher return as a result.
Benchmark 10-year notes were last marked at 4.375%, after rising nearly 10 basis points during the Thursday session, while 2-year paper was pegged at a three-week high of 3.862%.
Those moves, as well as the market’s unease heading into the weekend’s U.S-China trade talks, are likely to weigh on stocks through the Friday session, which is also replete with public comments from Federal Reserve officials following Wednesday’s policy meeting.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were priced for an opening bell gain of around 9 points, with the Dow Jones Industrial Average called 10 points higher.
The tech-focused Nasdaq, meanwhile, looks set for a 50 point advance with Nvidia (NVDA) , Tesla (TSLA) and Intel (INTC) active in premarket dealing.
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In overseas markets, Britain’s FTSE 100 gained 0.45% in mid-day London trading following yesterday’s trade framework agreement, with the regional Stoxx 600 benchmark rising 0.47%.
Overnight in Asia, the Nikkei 225 powered 1.56% higher in Tokyo off the back of Wall Street’s solid finish, while the regional MSCI ex-Japan benchmark rose 0.46% into the close of trading.
