By Barbara Kollmeyer, MarketWatch
Oil rallies, dollar falls as investors snap up perceived riskier
assets
U.S. stocks were poised to rally on Monday, with Dow futures up
over 500 points after the U.S. and China agreed to call a truce to
their trade war over the weekend, triggering relief buying of
perceived riskier assets such as equities.
Oil prices climbed nearly 5%, while the dollar tumbled.
How are the main benchmarks trading?
Dow Jones Industrial Average futures soared 539 points, or 2%,
to 26,077. S&P 500 futures jumped 53.95 points, or 2%, to
2,812.25. Nasdaq-100 futures saw even bigger gains, up 176 points,
or 2.5%, to 7,125.50.
On Friday
(http://www.marketwatch.com/story/us-stocks-poised-to-retreat-as-g-20-summit-gets-under-way-2018-11-30),
the S&P 500 index rose 0.8%, to 2,760.17, while the Nasdaq
Composite Index added 0.8% to 7,330.54. The Dow Industrials climbed
199.62 points, or 0.8%, to 25,538.46.
Both the S&P 500 and the Nasdaq logged their best weekly
performance since December 2011, while the blue-chip index posted
its strongest week since November 2016.
Read: A rudderless Fed invites more stock-market volatility,
analysts say
(http://www.marketwatch.com/story/a-rudderless-fed-invites-more-stock-market-volatility-analysts-say-2018-12-01)
What's driving the market?
A trade standoff between the U.S. and China saw a breakthrough
at the
(http://www.marketwatch.com/story/us-to-delay-china-tariffs-after-trump-xi-dinner-meeting-at-g-20-in-buenos-aires-2018-12-01)G-20
meeting in Argentina, a gathering that included a
highly-anticipated dinner between President Donald Trump and
Chinese leader Xi Jinping. The two sides agreed to launch
negotiations to cool trade tensions and discuss forced technology
transfer, intellectual-property protection, non-tariff barriers,
cyber and agriculture issues, among other issues.
Read:Tariff truce likely to ease investors' immediate fears, but
obstacles linger
(http://www.marketwatch.com/story/tariff-truce-likely-to-ease-investors-immediate-fears-but-obstacles-linger-2018-12-02)
(http://www.marketwatch.com/story/tariff-truce-likely-to-ease-investors-immediate-fears-but-obstacles-linger-2018-12-02)And:
U.S. and China call a truce in the trade war. Now what?
(https://www.barrons.com/articles/trump-china-g20-meeting-1543761501?mod=mktw)
If those talks aren't successful, planned tariffs on $200
billion of Chinese goods will rise to 25% from the current 10%, an
increase that was due to kick in at the start of 2019. China also
said it would buy a "very substantial" amount of U.S. agriculture,
energy and industrial goods.
Trade optimism fed through to other assets with crude oil up
nearly 5%, as investors looked ahead to an OPEC meeting on Dec. 6.
Gains came as Russian President Vladimir Putin said over the
weekend that his country and Saudi Arabia have agreed to extend a
deal to cut output
(http://www.marketwatch.com/story/putin-says-russia-saudis-agree-to-renew-opec-production-cuts-2018-12-02).
Also for oil, Qatar said it will withdraw from OPEC on Jan. 1,
2019, in announcement Monday
(http://www.marketwatch.com/story/qatar-to-pull-out-of-opec-on-jan-1-says-ministry-2018-12-03).
The New York Stock Exchange and Nasdaq will close Wednesday
(http://www.marketwatch.com/story/new-york-stock-exchange-and-nasdaq-to-close-wednesday-for-bush-mourning-day-2018-12-01),
as a national day of mourning will be held in memory of former
President George Herbert Walker Bush. A state funeral will be held
the same day, and a moment of silence will also be observed during
Monday's trading session.
What are strategists saying?
"In reality, it was never likely that either side was going to
back down in their trade disagreements, and upping the ante this
close to Christmas would likely have been counterproductive, so the
option to maintain the current status quo and defer the 15%
increase in tariffs on Chinese goods, due to kick in on January 1
is not only a positive step, but also a fairly easy option to
take," said Michael Hewson, chief market analyst at CMC Markets, in
a note to clients.
"Who knows, President Xi and the Chinese authorities may pull a
rabbit out of the hat through this new negotiating period and
promote enough believe that the U.S. trade representatives
permanently leave the tariffs on the $200b at 10%, but that is a
big if," said Chris Weston, head of research at Pepperstone, in a
note to clients.
But for now, Weston said, the trade development has triggered a
"global sigh of relief" for markets. Whether that is sustainable
"will be now down to the economic data due through the week and
whether OPEC now deliver the goods."
How were other markets trading?
Asian stocks also rallied
(http://www.marketwatch.com/story/asia-pacific-stocks-jump-on-us-china-trade-truce-2018-12-02),
with Japan's Nikkei up 1% and the Shanghai Composite Index gaining
2.5%. European stocks also climbed in early trading
(http://www.marketwatch.com/story/europe-stocks-track-global-rally-resource-stocks-soar-2018-12-03-39136591173599929),
with the Stoxx Europe 600 index adding 2%.
Gold prices rose 0.8% to $1,235.40 an ounce, while the ICE
Dollar Index slipped 0.4%.
(http://www.marketwatch.com/story/dollar-strengthens-as-g-20-summit-kicks-off-2018-11-30)
(END) Dow Jones Newswires
December 03, 2018 04:14 ET (09:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.