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Trade optimism buoys global stocks; Fed minutes in focus

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Trade optimism buoys global stocks; Fed minutes in focus

➤ Global stocks, U.S. futures rise as trade talks extended for a third day.

➤ U.S. Fed minutes, Bank of Canada interest rate decision in focus.

➤ Brent crude surges as U.S. inventories drop.

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Wall Street futures rose on cue from gains in global stock markets amid growing optimism around trade talks between the U.S. and China.

Asian markets rallied, with the Shanghai SE Composite index closing 0.71% and Hong Kong's Hang Seng surging 2.27% after trade discussions between U.S. and Chinese officials continued for an unscheduled third day in Beijing. Sources told Bloomberg News that both sides moved closer on certain areas, such as energy and agriculture, though other structural issues will need to be ironed out when more senior officials meet at a later date.

Earlier, U.S. President Donald Trump said in a tweet that the trade talks with Beijing were "going very well!" Separately, American Petroleum Institute CEO Mike Sommers said yesterday that the two economies were close to a trade deal that would head off a potential March 2 hike in tariffs on U.S. LNG exports.

The developments came as the World Bank warned that global economic growth in 2019 is likely to cool to 2.9% from 3% last year, as trade tensions persist and financial conditions in some large emerging economies continue to face headwinds.

Japan's Nikkei 225 index closed 1.10% higher. European stock markets tracked gains in Asia, with France's CAC 40 surging 1.13%, Germany's DAX index adding 0.95% and the FTSE 100 rising 1.03% as of 6:30 a.m. ET.

In currencies, sterling ticked up 0.04% against the dollar after British lawmakers approved a measure that would curb the government's ability to raise taxes in the event of a hard Brexit, creating a new hurdle in case Britain exits the European Union without a deal. The euro was broadly unchanged against the dollar, while the Japanese yen edged 0.14% lower.

The Canadian dollar strengthened 0.24% against its U.S. counterpart ahead of the Bank of Canada's monetary policy decision later today. The central bank is expected to keep interest rates on hold and "will have to acknowledge recent developments in the energy sector and financial markets, but will try to strike a balanced tone as the longer-term forecast is largely intact," TD Securities wrote.

Yields on 10-year U.S. Treasurys ticked up 1 basis point to just under 2.74% ahead of the release of minutes from the U.S. Federal Open Market Committee's latest monetary policy meeting, which ING noted could provide more insight on the committee's decision to lower the trajectory of prospect interest rates for 2019.

Analysts expect the December 2018 meeting minutes to be somewhat dated as Fed Chairman Jerome Powell recently departed from his stance on altering the central bank's balance sheet cuts, saying the Fed "wouldn't hesitate to change" its tightening plans. Powell also recently noted that the Fed "will be patient" on tightening monetary policy and is "listening carefully" to the stock market's concerns over decelerating growth.

Brent crude oil briefly hit $60 per barrel on the ICE Futures Exchange and was up 1.82% to $59.79 after a report from the API noted that U.S. crude oil inventories fell more than expected over the last week. Investors will focus on the U.S. Energy Information Administration's weekly petroleum status report later today.

Gold dipped 0.33% to $1,281.60 per ounce.

More from S&P Global Market Intelligence:

Big luxury companies could face Chinese headwinds in 2019

Analysis: Big tech no longer certain bet in 2019

Largest Asia-Pacific banks see QOQ declines in Q4'18 market cap

Top 20 European banks by market cap, Q4'18

US real estate M&A activity spikes in 2018 with cash-heavy deals

The day ahead:

8:15 a.m. ET — Canada housing starts (Econoday consensus: 210,000 AR)

8:20 a.m. ET — U.S. Fed's Raphael Bostic speaks

9 a.m. ET — U.S. Fed's Charles Evans speaks

10 a.m. ET — Bank of Canada monetary policy announcement (Econoday consensus: no change)

10:30 a.m. ET — U.S. EIA petroleum status report

11:30 a.m. ET — U.S. Fed's Eric Rosengren speaks

2 p.m. ET — FOMC minutes