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US close: Stocks close higher after Trump announces the first phase of a US-China trade deal

By Iain Gilbert

Date: Friday 11 Oct 2019

US close: Stocks close higher after Trump announces the first phase of a US-China trade deal

(Sharecast News) - US stocks closed sharply higher on Friday after Donald Trump said the US and China had reached the first phase of a trade deal that would delay tariff hikes set to kick in next week.
At the close, the Dow Jones Industrial Average was up 1.21% at 26,816.59, while the S&P 500 was ahead 1.09% at 2,970.27 and the Nasdaq Composite saw out the session 1.34% firmer to reach 8,057.04.

The Dow closed 319.92 points higher on Friday after Trump told reporters at the Oval Office that the first phase of a major trade deal would be written over the next three weeks.

Major indices hit their session highs following the comment, with the Dow rising more than 500 points.

Wall Street's major indices gained following Donald Trump's tweet that "good things are happening" at the US-China talks, with "warmer feelings" than there had been in the recent past. He will meet with Chinese Vice Premier Liu He in Washington later on Friday.

As part of the first phase, China will purchase between $40-50bn worth of agricultural goods. The deal was said to also include agreements on foreign-exchange issues with China. In exchange, the US will hit the brakes on tariff hikes due to come into effect on Tuesday.

Treasury Secretary Steven Mnuchin said both sides had reached an "almost complete agreement" on currency and financial services issues. Phase two of the deal will "start almost immediately" after the first one is signed.

Trump's comments were preceded by an announcement from China's securities regulator containing a timetable for removing a requirement on foreign financial companies to have a Chinese investor.

However, stocks fell off their session highs later in the session after US Trade Representative Robert Lighthizer stated a decision had not yet been reached regarding additional US tariffs scheduled for December.

On the data front, US import prices edged higher unexpectedly last month as energy costs bounced back.

According to the Department of Labor, prices of imported goods rose at a 0.2% month-on-month pace in September (consensus: 0.0%), as fuel import costs jumped by 2.1% following a drop of 1.9% during the month before.

On the export side of the equation, prices were down by 0.2% on the month, driven by a 1.8% decline in those for agricultural exports, while non-agricultural export prices slipped by a tenth of a percentage point.

Elsewhere, US consumer sentiment jumped past forecasts in early October as Americans anticipated income growth and lower inflation over the year ahead, the results of a closely-followed survey revealed.

Preliminary data for October revealed a rise in the University of Michigan's consumer confidence index end-September level of 93.2 to 96.0 (consensus: 92.0).

Improved sentiment around the current economic situation accounted for the bulk of gains, with the corresponding sub-index rising from 108.5 to 113.4.

Meanwhile, on the corporate front, shares in tech giants Facebook, Amazon and Alphabet all closed higher on the US-China news, as did Apple, Micron Technology, JP Morgan Chase and Bank of America stocks.


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