Investing.com - Here are the top five things you need to know in financial markets on Friday, Jan. 18:
1. Global stocks buoyed by U.S.-China trade developments
Global stocks hit their highest point in more than a month on Friday as investors placed hopes on reports of progress in the continuing trade negotiations between the U.S. and China.
According to a Wall Street Journal report released Thursday, U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a rollback during trade discussions scheduled for Jan. 30.
The strategy was reportedly designed to provide China with an incentive to make deeper concessions when the two parties meet up at the end of this month.
But the report also suggested that U.S. Trade Representative Robert Lighthizer opposed the idea and the U.S. Treasury later stated, “Neither Secretary Mnuchin nor Ambassador Lighthizer have made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China.”
European stocks followed strong gains in Asia and rose to their best level since early December with the pan-European Stoxx 600 up around 1%. China’s Shanghai Composite closed up 1.4% while Japan’s Nikkei 225 rose 1.3%.
U.S. futures pointed to a higher open. At 5:56 AM ET (10:56 GMT), the blue-chip Dow futures gained 85 points, or 0.35%, S&P 500 futures rose 6 points, or 0.22%, while the Nasdaq 100 futures traded up 16 points, or 0.24%.
2. Netflix and Tesla cast a shadow on tech optimism
Netflix and Tesla gave bulls reasons for caution on Friday as both stocks slumped in premarket trade Friday.
Shares in Netflix (NASDAQ:NFLX) fell more than 2% ahead of the open as the company’s quarterly revenue missed consensus and its first-quarter earnings guidance was well below analysts’ expectations.
Amid concerns over signs of a global economic slowdown, investors are worried about its impact on corporate earnings. 44 of the S&P 500 companies have reported results for the fourth quarter so far and only 52% have topped sales estimates. That compares to the three-year average of 67%, according to The Earnings Scout.
Read more: Starbucks (NASDAQ:SBUX) Earnings Look Strong, But There’s Little Upside For Shares -Haris Anwar
Tesla also spooked investors on Friday after Chief Executive Elon Musk said he was cutting its full-time workforce by 7% in order to lower operating costs. Shares (NASDAQ:TSLA) fell nearly 8%.
3. U.S. consumer sentiment expected to drop
On the economic front, investors will focus on the preliminary reading of the University of Michigan’s consumer sentiment index at 10:00 AM ET (15:00 GMT).
Consumer optimism is expected to drop to a reading of 97.0 in January, underlining concerns over the state of the U.S. economy against the backdrop of the prolonged government shutdown.
While investors await the Federal Reserve policy meeting on Jan. 29-30, they will play close attention to remarks from policymakers, hoping for further hints that the U.S. central bank will take a pause in tightening monetary policy.
New York Fed president John Williams and Philadelphia Fed chief Patrick Harker will both make appearances on Friday.
4. Trump cancels Davos trip for U.S. delegation due to government shutdown
As the partial shutdown of the government entered its 28th day on Friday, U.S. President Donald Trump cancelled his delegation’s trip to the annual World Economic Forum.
“Out of consideration for the 800,000 great American workers not receiving pay and to ensure his team can assist as needed, President Trump has canceled his Delegation's trip to the World Economic Forum in Davos, Switzerland,” press secretary Sarah Sanders said in a late Thursday statement.
Trump had previously cancelled his own plans to attend due to the shutdown, which is the longest ever, as the president battles with Congress over funding for the southern border wall with Mexico.
5. Oil gains 1% on tariff news despite concern over increasing U.S. output
Oil registered a sharp rise on Friday as the report of the U.S. reducing tariffs on China at the end-of-the-month trade talks eased tensions for the economic impact on the world’s largest crude importer, although investors were wary of increasing U.S. output and looked ahead tothe latest data on U.S. shale production.
U.S. crude oil futures gained 71 cents, or 1.36%, to $52.78 by 6:04 AM ET (11:04 GMT), while Brent oil also traded up 71 cents, or 1.16%, to $61.89.
The market also came round to a more positive interpretation of the monthly report from OPEC earlier Thursday, which showed that the cartel's production fell sharply in December, registering its biggest month-on-month drop in almost two years.
Traders will also focus Baker Hughes' weekly rig count data, an early indicator of future U.S. output, at 1:00 PM ET (18:00 GMT).
The oil services provider reported a second consecutive decline last week, suggesting a near-term slowdown in U.S. crude output. Data from the U.S. Energy Information Administration showed on Wednesday that U.S. production had hit a record high of 11.9 million barrels a day last week.
U.S. oil production growth combined with a slowing global economy will put oil prices under downward pressure in 2019, the International Energy Agency warned on Friday.