New date for Sino US talks boosts markets

The US and China will sit down at the negotiating table next week to try and resolve the almost year-long trade dispute that continues to disrupt business flows between the two countries and keeps global markets on tenterhooks. The FTSE and other European gauges perked up on the news and started the trading day in positive territory.

US government reopens for business

However, it remains a different story on Wall Street where stocks are still reeling from Apple’s warning about lower sales in China. Stock futures are deep in the red with Dow futures trading down 2.8% and the Nasdaq down 3.04% despite the US government reopening for business. Congress reconvened on Thursday for the first time in eight years with a democratic majority and the first legislation it passed was to finance the government departments that have been closed over Christmas and New Year but without approving President Donald Trump’s demand for financing a border wall with Mexico – the dispute that brought the government to a standstill in the first place. But this is unlikely to be the end of it as Republicans hold a majority in the Senate and the Senate so far seems to be refusing to deal with any legislation that could be vetoed by the President.

US job reports and Fed chair address

There could be additional volatility in the US bonds and currency markets as the key US jobs report is released later today, only hours before Federal Reserve chairman Jerome Powell is due to speak before a gathering of the American Economic Association in Atlanta. The jobs data is expected to show a solid market, in line with the numbers over the last month, yet investors will be looking to the Fed to indicate a slower rate of hikes this year in order to keep the pace of stock increases up, a move that would be in contradiction with the jobs data. Powell would have to tread a fine line to be able to keep both the markets happy and look after the state of the US economy.

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