Futures on the Dow Jones Industrial Average (DJIA) are up early Monday morning as the stock market looks to stitch together another weekly gain. The stage seems set for the Dow to open the week on the front foot as the U.S. and China seem to be playing together nicely after their latest trade deal.
Xi Jinping praised the trade deal between the two countries following a phone call with President Trump on Friday. This should soothe concerns about any potential cracks looming beneath the pact and help the Dow clock another day of gains. More importantly, the Chinese finance ministry released important details regarding the trade deal. Beijing has decided to lower tariffs on more than 850 products beginning Jan. 1.
China has also announced that it will reduce tariffs on the import of frozen pork to 8 percent from the earlier level of 12 percent. The country has been forced into taking such a step to plug the shortage of pork in the country. In fact, China’s pork imports through the eleven months of 2019 have jumped 58 percent over the same period last year.
Now that China is looking to lower import tariffs, demand for American pork in the country should improve. Importers will look to reduce the supply shortage that has caused a massive bump in pork prices. All of this paints a favorable picture for the U.S. stock market this week.
Dow Jones futures are up 35 points, or 0.12 percent, as at 6.18 am ET.
S&P 500 futures are up 0.16 percent, while Nasdaq Composite futures are up 0.20 percent. In all, the stock market looks set to open higher today, and it won’t be surprising if it ends the day on a high as well.
It looks like the trade deal-related enthusiasm will continue to drive up the stock market and the Dow today as Trump has reportedly invited U.K. Prime Minister Boris Johnson to the White House next year. According to a White House source interviewed by the Sunday Times of London (via The New York Post):
Some potential dates have been floated in mid-January but nothing has yet been formally agreed. But it is clear that both sides want to make it happen sometime in early 2020.
This potential meeting has given rise to hopes of a potential trans-Atlantic trade pact between the U.S. and the U.K. in a post-Brexit scenario.
The Dow and the broader stock market could react positively to this development today, especially considering that the U.S. economy seems to be moving in the right direction of late.
According to the Bureau of Economic analysis, the U.S. economy clocked 2.1 percent gross domestic product (GDP) growth in the third quarter of the year. That’s up from the second quarter’s 2 percent growth, and also higher than an initial estimate that put the GDP expansion at 1.9 percent. The Bureau of Economic analysis pointed out (via the Financial Times):
The increase in real GDP in the third quarter reflected positive contributions from [personal consumption expenditure], federal government spending, residential investment, private inventory investment, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment.
In the end, it can be concluded that the Dow could continue building upon its recent gains this week thanks to the positives highlighted above.
Last modified: January 22, 2020 11:40 PM UTC