Monday's Stock Market Open: US Equities Higher On Good Economic Data In China

U.S. stocks traded higher on Monday on some generally good domestic economic data in China, while traders keep looking for more definitive details surrounding the U.S.-China trade deal.

The Dow Jones Industrial Average gained 188.47 points to 28,323.85 while the S&P 500 added 28.66 points to 3,197.46 and the Nasdaq Composite Index rose 97.07 points to 8,831.95.

In response to the U.S. decision to postpone a scheduled tariff increase on $160 billion of Chinese goods and to cut some existing tariffs, Beijing said on Sunday it will itself postpone planned tariffs on U.S. automobiles and other goods.

U.S. Trade Representative Robert Lighthizer also said as a result of the phase one trade deal, China will purchase $40 billion of U.S. agricultural products over the next two years.

“There’s a lot to be seen in the weeks and months ahead whether we are going to be able to actually deliver on the phase-one deal that we just went through,” Ephie Coumanakos, Concord Financial’s group managing partner, said on Bloomberg TV. “We don’t know all of the specifics.”

The Chinese government said Monday domestic industrial output grew 6.2% in November from a year ago, while retail sales increased 8%.

“Activity and spending indicators strengthened across the board last month, though we think this uptick will prove short-lived,” said Martin Lynge Rasmussen, China economist at Capital Economics. “Admittedly, the phase one U.S.-China trade deal could boost both export activity and corporate investment in the near term. But real estate, a key prop to growth in recent quarters, is primed for a moderation as financing to the sector is being squeezed by a regulatory crackdown.”

Chang Shu, chief Asia economist at Bloomberg Economics, also cautioned that “downward pressures on the economy remain. Cyclical policy easing is expected to continue, though likely with a little less intensity.”

Oxford Economics raised its 2020 growth forecast for China to 6.0% from 5.7% “following signs that growth has stabilized.”

Europe received more bad news on the economic front. In the eurozone, the IHS Markit manufacturing purchasing managers index slipped in December to 45.9, a two-month low, while the services purchasing managers index climbed up to a 4-month high of 52.4 from 51.9. In Germany, manufacturing purchasing managers index unexpectedly fell to 43.4 in December while in France it dropped to 50.3. In the U.K., manufacturing purchasing managers index fell to 47.4, a seven-year low.

U.S. services purchasing managers index came in at 52.2 in December versus an expected 52.0. Manufacturing purchasing managers index was 52.5 versus 52.6 expected.

"The surveys bring welcome signs of the economy continuing to regain growth momentum as 2019 draws to a close, with the outlook also brightening to fuel hopes of a strong start to 2020,” said Chris Williamson, chief business economist at IHS Markit. “Business activity, order book and jobs growth all accelerated to five-month highs in December, buoyed by rising domestic sales and further signs of renewed life in export orders.”

The New York Fed’s Empire State business conditions index edged up 0.6 points to 3.5 in December, denoting subdued manufacturing conditions in the state.

Boeing (BA) may suspend or scale back production of its 737 MAX aircraft if federal approval of flight-control software fixes and training changes continues to be delayed.

International Flavors and Fragrances (IFF) agreed to merge with DuPont’s (DD) Nutrition and Biosciences unit in a $26.2 billion deal that will form a new company.

Overnight in Asia, markets finished mixed. The Hang Seng dropped 0.65% while Japan’s Nikkei-225 slipped 0.29% and China’s Shanghai Composite climbed 0.56%.

European markets closed higher with the FTSE 100 up 2.25% while Germany's DAX rose 0.94% and France's CAC 40 advanced 1.23%.

Crude oil futures gained 0.13% to $60.15 per barrel and Brent crude was up 0.34% at $65.44. Gold futures fell 0.15%.

The euro gained 0.19% at $1.141 while the pound sterling slipped 0.02% at $1.3327.