US open: Small gains at the open as US-Sino relations remain in focus
By Iain Gilbert
Date: Wednesday 20 Feb 2019
(Sharecast News) - Wall Street opened slightly higher on Wednesday as investors mulled over the latest developments in Sino-US trade relations and looked to the release of Federal Reserve minutes later in the day.
At 1520 GMT, the Dow Jones Industrial Average was up 0.06% at 25,907.22, while the S&P 500 moved ahead 0.02% to 2,780.44 and the Nasdaq traded 0.16% firmer at 7,498.51.
Sino-US trade relations were in focus again after Donald Trump told reporters at the White House on Tuesday that talks between the two nations were "going very well" and suggested that the 1 March deadline for raising tariffs could be extended.
Lukman Otunuga, research analyst at FXTM, said Trump's latest comment on how trade talks are going well has clearly boosted confidence over negotiations between the two sides concluding on a positive note.
"However, with Trump also stating that the talks are 'very complex' and the current March deadline is not a 'magical date', a breakthrough deal is still some distance away. A market-friendly outcome this week will be for both sides to agree on extending the 1 March deadline, which should provide more time for finding a middle ground on trade policy."
Market participants were also patiently awaiting the release of minutes from the Fed's January policy meeting, which are due at 1900 GMT.
Konstantinos Anthis, head of research at ADSS, pointed out that investors have been selling the dollar since Tuesday in expectation of further evidence of a dovish tilt in the Fed's policy in regards to interest rates.
"It's key to remember here that the Fed changed its tune in December, citing elevated risks in the face of rising geopolitical uncertainties and suggested that a patient approach is more appropriate going forward. This had led the euro to rise quickly and the dollar/ yen to drive lower in a hurry.
"If the Fed reaffirms the need for a steady interest rates' policy in the foreseeable future then equities will benefit but we also need to be mindful of the broader geopolitical backdrop. With the US and China trade talks still ongoing traders will look for concrete evidence of progress before recommitting to overweight longs."
On the corporate front, CVS Health dropped 7.91% in early trade, while Garmin was tracking 7.95% higher after both reported their earnings ahead of the open.
Cheesecake Factory, Agilent and Sturm Ruger's earnings are due after the close.
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