By Lorcan Roche Kelly
Recently there has been a lot that looked like it might derail trade talks between the U.S. and China. Yesterday’s vote in the House of Representatives to impose sanctions on Chinese officials over human rights abuses against Muslim minorities and President Donald Trump’s comments that he was happy to wait until after the election to reach an accord all increased the risks of a breakdown in talks. Despite all the noise, both sides are moving closer to agreement, according to people familiar with the situation, and U.S. negotiators expect a phase one deal to be agreed before the Dec. 15 tariff deadline.
While Trump is in London for a second day of NATO meetings the impeachment process moves on to the next stage in Washington. The House Judiciary Committee, one of the most polarized in Congress, begins the task of drawing up articles of impeachment that will almost certainly be presented to the House for a full vote. The Intelligence Committee’s report released yesterday said Trump abused his office and obstructed their inquiry.
There are mixed signals on oil production targets ahead of the meeting of OPEC and its allies in Vienna this week. Iraqi Oil Minister Thamir Ghadhban said he believed that Saudi Arabia supported his call for more output cuts. The chance of tighter supplies, coupled with the positive signs on trade, helped push a barrel of West Texas Intermediate for January delivery above $57. The Aramco IPO seems to be going well, with the company considering pricing it at the top end of the marketed range, which would make it the world’s biggest-ever new listing.
Trade news is again the dominant factor in global equities this morning. Overnight, the MSCI Asia Pacific Index dropped 0.6% while Japan’s Topix index closed 0.2% lower as investors reacted to Trump not being in a hurry to make a deal. In Europe, the Stoxx 600 Index was 0.9% higher at 5:50 a.m. Eastern Time, with the news that trade negotiators are making progress boosting all but one industry sector. S&P 500 futures pointed to a positive open, the 10-year Treasury yield was at 1.741% and gold was flat.
The first hint of how Friday’s jobs numbers will come in might be in the ADP unemployment change data due at 8:15 a.m. November services PMI is at 9:45 a.m. and ISM non-manufacturing is at 10:00 a.m. Also at that time Canada’s central bank is expected to hold rates unchanged, and Fed Vice Chairman for Supervision Randal Quarles begins testimony before the House Financial Services Committee. Synopsys Inc. and Slack Technologies Inc. are among the companies reporting.