US market to open higher over Sino-US trade pact

Wall Street was set to open higher on Monday amid rising hopes that the United States and China would reach a trade deal as early as this month. The latest driving force for the optimism was a report over the weekend that said U.S. President Donald Trump and his Chinese counterpart Xi Jinping could sign a formal trade pact at a summit around March 27.

The two countries appear close to an agreement that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs, a source briefed on the deal talks told Reuters. Tariff-sensitive names including Boeing Co and Caterpillar gained 0.7 per cent and 0.9 per cent each, while chip stocks, such as Intel Corp, Advanced Micro Devices Inc and Micron Technology Inc, rose between 1.1 per cent and 1.4 per cent.

The heavyweight FAANG group of stocks - Facebook Inc, Amazon.com Inc, Apple Inc, Netflix Inc and Alphabet Inc - advanced between 0.4 and 0.9 per cent. "Futures are modestly higher on the notion that there is some deal to be had with China and the U.S. The market is not celebrating yet because the deal isn't revealed," said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh, Pennsylvania.

"Investors are now looking at areas that would benefit, like technology, because there have probably been some sales in that area that has been put off." Optimism on trade along with the dovish stance of the Federal Reserve has spurred a strong run in stocks, with the benchmark S&P 500 up 11.8 per cent this year and about 4.5 per cent away from its Sept.20 record closing high.

Last week, the Nasdaq posted its longest run of weekly gains since late 1999. Meanwhile, the S&P 500 breached 2,800 level several times last week before closing above that mark on Friday for the first time since Nov.8. At 8:19 a.m. ET, S&P 500 e-minis were up 8.5 points, or 0.3 per cent. Dow e-minis were up 83 points, or 0.32 per cent and Nasdaq 100 e-minis were up 37.25 points, or 0.52 per cent.

Among other movers, Kraft Heinz Co gained 2.2 per cent after brokerage Morgan Stanley raised the rating on its shares. Tesla Inc rose 1.4 per cent after Chief Executive Officer Elon Musk said the electric carmaker would unveil its Model Y on March 14.

Dialysis service provider DaVita Inc slipped 4.4 per cent after the Trump administration sought to cut dialysis costs. A U.S. Commerce Department report due at 10:00 a.m. ET is likely to show total construction spending rose 0.2 per cent in December from a 0.8 per cent rise a month earlier.

Amid a slew of economic data expected this week, investors will be closely watching the February non-farm payrolls report due on Friday to gauge the strength of the U.S. labour market.