Futures jump as China signals progress in trade talks
US stock index futures jumped on Thursday as signs of a US-China trade truce and a fresh batch of earnings reports looked set to restart a rally that has led Wall Street to record highs.
The benchmark S&P 500 index is eyeing its fifth straight week of increases, while the tech-heavy Nasdaq is set to log six weeks of gains.
China said on Thursday that it had agreed with the United States to remove tariffs in phases.
An interim US-China trade deal is widely expected to include a US pledge to scrap tariffs scheduled for Dec. 15 on about $156 billion worth of Chinese imports, including cell phones, laptop computers and toys.
Tariff cancellation was an important condition for any agreement, ministry spokesman Gao Feng said, adding that both must simultaneously cancel some tariffs on each other’s goods to reach a “phase one” trade deal.
“The trade war started with tariffs, and should end with the cancellation of tariffs,” Gao told a regular news briefing.
The proportion of tariffs canceled for both sides to reach a “phase one” deal must be the same, but the number to be canceled can be negotiated, he added, without elaborating.
“In the past two weeks, the lead negotiators from both sides have had serious and constructive discussions on resolving various core concerns appropriately,” Gao said.
“Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations.”
He did not give a timeline.
In what could be another gesture to boost optimism, China’s state news agency Xinhua reported late on Thursday that the Chinese customs and the Ministry of Agriculture are considering removing restrictions on US poultry imports.
China has banned all US poultry and eggs since January 2015 due to an avian influenza outbreak.
Beijing’s signal that a ‘phase 1’ trade deal with the United States was close to being sealed helped Europe’s share markets hit a more than 4-year peak on Thursday and bond yields shuffled higher.
A source previously told Reuters that Chinese negotiators wanted the United States to drop 15% tariffs on about $125 billion worth of Chinese goods that took effect on Sept. 1.
They also sought relief from earlier 25% tariffs on about $250 billion of imports, ranging from machinery and semiconductors to furniture.
A person familiar with China’s negotiating position said it was pressing Washington to “remove all tariffs as soon as possible”.
A deal may be signed this month by President Donald Trump and Chinese President Xi Jinping at a yet-to-be determined location.