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U.S. equities looked set to open higher Sept. 13, tracking gains from Europe and Asia, amid further signs of progress in trade talks. The euro rose, along with European bond yields, after the European Central Bank rolled out a more dovish package than expected.
China will reportedly move to exclude some U.S. agricultural products like soybeans and pork from additional tariffs.
U.S. President Donald Trump said he was inclined toward a "whole deal" covering all aspects of trade with China, but did not rule out the prospect of an interim agreement. This came after trade advisers to Trump were reportedly considering proposing a limited trade deal with China that would postpone and remove some tariffs on Chinese goods. In return, China would have to make commitments on intellectual property protection and purchases of U.S. agricultural products.
Stock futures for the S&P 500 and Nasdaq 100 gained 0.3% each around 6:30 a.m. ET. In Europe, Germany's DAX and France's CAC 40 advanced 0.4% each, while London's FTSE 100 slipped 0.1%.
In Asia, Japan's Nikkei 225 rose 1.1% and Hong Kong's Hang Seng advanced 1%. Stock markets in China were closed for a holiday.
Sovereign bonds retreated, having rallied after the ECB announced its stimulus package Sept. 12, committing to open-ended quantitative easing in a bid to jerk the eurozone out of low inflation and low growth.
The central bank will restart its asset purchases from Nov. 1 at a monthly pace of €20 billion — smaller than some had expected and well below the peak of €80 billion a month in 2016. It also cut the deposit rate by 10 basis points to -0.50%, introduced a tiered system of reserve remuneration and trimmed its GDP growth outlook.
The ECB's move sets the stage for other central banks to accelerate rate cuts and could result in more negative-yielding bonds in the coming months, said Margaret Yang Yan, market analyst at CMC Markets Singapore.
The yield, which moves opposite to prices, on 10-year German Bund added 3 basis points to negative 0.485%, while that on Italian and French government bonds due in a decade were up 6 basis points each.
In the U.S., 10-year Treasury yields rose 3 basis points to 1.805%. Bankers may not think negative rates are probable in the U.S., but they are holding internal discussions and planning for the scenario. Earlier this week, Trump has called on the Federal Reserve, whose monetary policy decision is due next week, to cut below zero.
In currencies, the Dollar Index lost 0.3%.
The euro was trading 0.2% higher versus the dollar. Sterling climbed 1.1% amid a report that the EU was preparing to grant another Brexit extension to the U.K.
The Japanese yen was up 0.1%. The Bank of Japan is reportedly studying ways of cutting rates further into negative territory while keeping yields on long- and short-term bonds from narrowing too much.
Brent crude oil fell 0.2% to $60.24 per barrel on the ICE Futures Exchange. The International Energy Agency held its global oil demand outlook unchanged for 2019 and 2020, anticipating a calming in the economic climate and trade disputes that trimmed demand in the first half. Meanwhile, the OPEC and its allies held off talks on any potential extension to output cuts and instead called for compliance with the existing deal.
Gold increased 0.5%.
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The day ahead:
8:30 a.m. ET — U.S. retail sales (Econoday consensus: 0.2% month over month)
8:30 a.m. ET — U.S. import and export prices
10 a.m. ET — U.S. business inventories (Econoday consensus: 0.3% month over month)
10 a.m. ET — University of Michigan's U.S. consumer survey (Econoday consensus: 91.0)
1 p.m. ET — U.S. Baker-Hughes rig count
