Higher Open Likely For US Markets: Oil Price Steady, Gold Up

Higher open likely for the U.S markets Friday as key stock index futures surged Friday morning.

This follows the build-up of expectations around the meeting between U.S. President Donald Trump and China President Xi Jinping in Japan lifting the market mood.

Around 6:20 a.m. ET, Dow Jones futures indicated a positive open of more than 95 points while futures on the S&P and Nasdaq also showed a surge.

Trump Xi meeting on Saturday is expected to reduce the trade tensions between the world’s two largest economies despite the divided opinion regarding its outcome.

The Chinese Ministry of Commerce urged the U.S to tone down its pressure and withdraw sanctions on Huawei and other Chinese companies. Trump is also harping on more tariffs for Chinese imports if talks do not take off.

Morgan Stanley CEO James Gorman expressed concern that if China and the U.S. fail to agree on a truce, there will be a “devastating effect on the global economy.”

On data, consumer spending, personal income figures, and personal consumption expenditures price index are expected at 8:30 a.m. ET. Among companies, Constellation Brands will be reporting the latest results before the bell.

Asian markets down

Stocks in the Asia Pacific dipped on Friday as Investors’ attention shifted to the G-20 summit in Osaka, Japan, where Donald Trump and China President Xi Jinping will be meeting to resolve the stalemate in U.S-China trade talks.

Japan’s Nikkei 225 slipped 0.29 percent while the Topix lost 0.14 percent to end the trading day at 1,551.14.

Mainland Chinese stocks also slumped with the Shanghai composite falling 0.6 percent. Hang Seng index in Hong Kong declined more than 0.3 percent at the last hour of trading.

South Korea’s Kospi was down 0.17 percent while Australia’s ASX 200 crashed 0.71 percent.

“If the negotiations are successful it is likely the US may remove all tariffs in case China agrees for a law to protect intellectual property, prevent forced technology transfer, etc,” commented Shane Oliver, head of the investment strategy at AMP Capital.

European markets moved up marginally on Friday as investors heightened focus on the developments around the G-20 summit in Osaka, Japan, and Trump Xi meeting.

The pan-European Stoxx 600 shot up 0.3 percent during the morning session.

Oil market steady

Meanwhile, oil prices held steady on Friday without much change. The rising focus on the outcome from the G20 summit and Trump Xi meeting seemed to have checked the volatility in oil price.

Brent crude futures jumped just 5 cents at $66.60 per barrel by 0043 GMT from the last close. The WTI crude futures (U.S. West Texas Intermediate) fell 2 cents at $59.41 a barrel.

The reigning trade war between the U.S and China had impacted oil prices, as fears were high that slowing economic growth from trade tensions could cut oil demand.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) and non-members including Russia will meet in Vienna on July 1-2 to decide on further supply cuts.

The group had been jointly running a production cut to keep out by 1.2 million barrels per day from supply to control prices from falling down. Russian President Vladimir Putin hailed the OPEC-led supply cut plan since January as a catalyst in stabilizing oil markets.

Gold rises

Gold prices surged on Friday as reports appeared that China and the U.S are hardening preconditions for the Trump Xi summit. This escalated demand for safe-haven assets like gold.

Lingering doubts on the success of the meeting spiked the appeal of bullion and June has become the best month in three-years.

Spot gold jumped 0.3 percent at $1,413.67 per ounce as of 0945 GMT. The U.S. gold futures zoomed 0.3 percent to $1,415.80.

“Doubts about the success of the meeting between the two leaders are weighing on risky assets and that is positive for gold,” said Peter Fertig, an analyst in Quantitative Commodity Research.