US open: Small gains at the bell ahead of Sino-US trade talks

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Sharecast News | 07 Jan, 2019

Wall Street trading began with some small gains on Monday as investors awaited the outcome of the latest round of trade talks between the US and China.

At 1545 GMT, the Dow Jones was 0.35% higher at 23,515.16, while the S&P 500 had picked up 0.57% to 2,546.34 and the Nasdaq was trading 0.86% firmer at 6,796.62.

While stocks managed to reverse losses seen immediately after the bell, investors still appeared to be somewhat wary as officials from the US and China were due to meet in Beijing later on in the day for the first discussions between the two since Donald Trump and Xi Jinping agreed a temporary truce in December.

James Hughes, chief market analyst at Axi Trader, said: "Although China has already telegraphed that it is happy to resolve the trade spat amicably, it’s difficult not to see Beijing as pushing for the best deal here.

"The White House is on the back foot, with a potentially damaging government shutdown ongoing and Donald Trump very much seen as the culprit of the recent stock market volatility. The trade deal - assuming it’s reached - should be good for stocks, but this point won’t have escaped Chinese negotiators."

On the macro front, activity in the US services sector deteriorated more than expected in December, according to data released on Monday.

The Institute for Supply Management's services index fell to a five-month low of 57.6 from 60.7 in November, missing expectations for a reading of 59.0.

The non-manufacturing business activity index slipped to 59.9 from 65.2 in November, reflecting growth for the 113th consecutive month.

The new orders index printed at 62.7 in December from 62.5 the month before, while the employment index fell to 56.3 from 58.4. The prices index came 57.6 compared from 64.3 in November.

Respondents indicated that there is still concern about tariffs, despite the hold on increases by the US and China. Also, comments reflected that capacity constraints have lessened but employment-resource challenges remain.

Elsewhere, the government shutdown entered its third week. Trump promised over the weekend to build his Mexico border wall out of steel as a compromise and repeated his threat that he may seek the necessary funding by declaring a state of emergency.

In corporate news, Eli Lilly dipped 0.47% after it said earlier that it had agreed to buy biopharmaceutical company Loxo Oncology for about $8bn in cash. The price represents a 68% premium to Loxo's closing share price on Friday. Loxo soared 66.18% at the bell.

Utility operator PG&E Corp shares tumbled 20.53% at the open following reports that the company is exploring a bankruptcy filing and asset sales.

Elsewhere, medical implant devices manufacturer Abiomed slipped 1.48% following the release of its third-quarter numbers and steel and metal manufacturer Commercials Metals was 4.28% weaker after its first-quarter earnings.

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