US open: Stocks gain ground in early trading, led by strong showing from Dow

Wall Street trading kicked off on a positive note on Tuesday with all thirty Dow components gaining in early trade after Chinese leader Xi Jinping was seen taking a less-aggressive stance with respect to trade in a recent speech, pledging to open up the country's economy and lower import tariffs.

At 1500 BST, the Dow Jones Industrial Average was up 1.26%, while the S&P 500 and Nasdaq moved 1.02% and 0.94% firmer, respectively.

Stocks rallied on Monday but ended off their highs following a report that the FBI had raided the office of Trump's personal lawyer, Michael Cohen.

In a speech at the Boao Forum for Asia, seen by many as Asia's Davos, President Xi - who made no reference to the trade spat with the US - said he will "significantly lower" tariffs on car imports this year and ease restrictions on foreign ownership in the industry as soon as possible. He also said he would expand the protection of intellectual property.

"The cold war and zero-sum mentality looks out of place in today’s world. Arrogance or only focusing one’s own interests will get nowhere. Only peaceful development and cooperation can truly bring win-win or all-win results,” he said.

David Cheetham, chief market analyst at XTB, said that while Xi’s comments are no doubt pleasing and provide timely evidence of his knowledge that a trade war is in no one's best interests, there remain three additional threats to the recent risk-on move.

Firstly, he pointed to the paring of gains into the US close on Monday on the back of the news that Cohen's office had been raided as part of a 'referral' from Special Counsel Robert Mueller who is investigating suspected Russian meddling in the 2016 election.

Secondly, he highlighted the fact that US sanctions against Russia caused Moscow shares to plummet the day before. Thirdly, Cheetham noted rising tensions in the Middle East after the alleged chemical attack in Syria over the weekend.

"Trump has promised a 'forceful' US response with the situation also adding to the US-Russian tensions seen at present. Whilst all of these potential threats will no doubt be playing on traders' minds, they have, for now at least, been usurped by Xi’s comments and the notable improvement in sentiment could well see a push higher going forward," Cheetham said.

On the data front, the latest survey from the National Federation of Independent Business showed small business sentiment in the US deteriorated more than expected in March.

The small business optimism index fell to 104.7 last month from 107.6 in February, missing expectations for a reading of 107.0 but still among the highest readings in survey history.

For the first time since 1982, taxes received the fewest number of votes as the number one problem.

NFIB president chief executive officer Juanita Duggan said: "It has been a remarkable 16 months for small business optimism.

"This is the first time in 35 years where the fewest number of small business owners have told us that taxes are their number one business problem. They’ve been so optimistic that they feel confident enough to raise wages and invest in their business, which grows the economy."

The next focus will be the release of the minutes from the Federal Reserve's March meeting on Wednesday, along with US inflation figures for the same month.

In corporate news, shares of all thirty Dow components gained ground after trading began, led by Intel, Boeing, Exxon Mobil, Goldman Sachs and Caterpillar, all of whose shares were climbing more than 2.5%.

Elsewhere, VeriFone Systems stock soared 52.03% after agreeing to a $3.4bn private equity acquisition by a group led by Francisco Partners and Tupperware Brands dropped 8.50% after cutting its first-quarter earnings guidance late on Monday.

Looking ahead to the rest of the week, earnings were due from BlackRock, Wells Fargo and JPMorgan Chase, starting from Thursday.