Trade Talks Optimism, Jobs Report May Lead To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a notably higher open on Friday, with stocks poised to add to the gains posted in the previous session.

Early buying interest may be generated amid indications China is open to trade talks with the U.S., with a spokesperson for China’s Ministry of Commerce saying U.S. officials have “repeatedly expressed their willingness to negotiate with China on tariffs.”

The spokesperson said China is “currently evaluating” messages sent to China through relevant parties hoping to start trade talks.

However, according to a Google translation, the spokesperson said the U.S. has to be prepared to “correct its wrong practices” and cancel unilateral tariffs if it wants to talk and warned failure to do so would show the U.S. has “no sincerity at all and will further damage the mutual trust between the two sides.”

The futures saw further upside following the release of a closely watched Labor Department report showing U.S. job growth far exceeded economist estimates in the month of April.

The Labor Department said non-farm payroll employment shot up by 177,000 jobs in April compared to expectations for an increase of about 130,000 jobs.

At the same time, the jumps in employment in February and March were downwardly revised to 102,000 jobs and 185,000 jobs, respectively, reflecting a net downward revision of 58,000 jobs.

The report also said the unemployment rate came in at 4.2 percent in April, unchanged from the previous month and in line with economist estimates.

A notable decline by shares of Apple (AAPL) may limit the upside for the markets, with the tech giant slumping by 2.8 percent in pre-market trading after reporting its quarterly results after the close of Thursday’s trading.

After surging early in the session, stocks gave back some ground over the course of the trading day on Thursday but remained mostly higher. The tech-heavy Nasdaq hung on to a standout gain, ending the session at its best closing level in over a month.

The major averages moved to the downside going into the end of the day but still closed in positive territory. The Nasdaq jumped 264.40 points or 1.5 percent to 17,710.74, the S&P 500 climbed 35.08 points or 0.6 percent to 5,604.14 and the Dow rose 83.60 points or 0.2 percent to 40,752.96.

The early rally on Wall Street came in reaction to upbeat earnings news from software giant Microsoft (MSFT) and Facebook parent Meta Platforms (META).

Shares of Microsoft are soared by 7.6 percent after the company reported better than expected fiscal third quarter results and provided strong full-year guidance.

Meta Platforms also shot up by 4.2 percent after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, pharmaceutical giant Eli Lilly (LLY) plummeted by 11.7 percent after reporting better than expected first quarter results but cutting its full-year profit forecast.

Shares of Qualcomm (QCOM) also plunged by 9.0 percent after the chipmaker reported fiscal second quarter results that beat expectations but provided disappointing revenue guidance for the current quarter.

Buying interest waned as the day progressed, however, as traders digested some disappointing U.S. economic data, including a Labor Department report showing first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended April 26th.

The Labor Department said initial jobless claims climbed to 241,000, an increase of 18,000 from the previous week’s revised level of 223,000.

Economists had expected jobless claims to inch up to 224,000 from the 222,000 originally reported for the previous week.

The Institute for Supply Management also released a report showing a slight decrease by its reading on U.S. manufacturing activity in the month of April.

The ISM said its manufacturing PMI edged down to 48.7 in April after slipping to 49.0 in March, with a reading below 50 indicating contraction. Economists had expected the index to dip to 48.0.

With Microsoft leading the way higher, software showed a substantial move to the upside, driving the Dow Jones U.S. Software Index up by 4.3 percent to its best closing level in over two months.

Significant strength was also visible among networking stocks, as reflected by the 4.2 percent spike by the NYSE Arca Networking Index. The index surged to a one-month closing high.

Oil service stocks also moved sharply higher amid a rebound by the price of crude oil, with the Philadelphia Oil Service Index jumping by 2.6 percent.

Retail stocks also saw notable strength on the day, while pharmaceutical, gold and healthcare stocks came under considerable pressure over the course of the session.

Commodity, Currency Markets

Crude oil futures are falling $0.60 to $58.64 a barrel after jumping $1.03 to $59.24 barrel on Thursday. Meanwhile, after plummeting $96.90 to $3,222.20 an ounce in the previous session, gold futures are surging $44.60 to $3,266.80 an ounce.

On the currency front, the U.S. dollar is trading at 144.63 yen versus the 145.39 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1324 compared to yesterday’s $1.1290.

Asia

Asian stocks advanced on Friday after China said it is evaluating the possibility of trade talks with the United States, raising hopes of trade war de-escalation. Regional trading volumes were muted as mainland Chinese markets remained closed for Labour Day.

The dollar dipped ahead of U.S. payrolls data, while gold recovered from a two-week low but was set for a weekly drop. Oil ticked higher after a fresh threat of U.S. sanctions against Iranian exports.

Hong Kong’s Hang Seng Index rallied 1.7 percent to 22,504.68, with tech and EV stocks leading the surge fueled by speculation of a U.S.-China trade deal.

Japanese markets rose sharply, with exporters rising on a weaker yen after the Bank of Japan trimmed its growth and inflation forecasts.

Sentiment was also boosted by positive comments from Japan’s chief trade negotiator. The Nikkei 225 Index jumped 1.0 percent to 36,830.69, while the broader Topix Index settled 0.3 percent higher at 2,687.78.

Seoul stocks ended marginally higher, with disappointing results from Amazon and Apple limiting overall gains. The Kospi inched up 0.1 percent to 2,559.79, led by shipbuilders and technology stocks. SK Hynix surged 4.8 percent and Hyundai Mipo Shipyard advanced 3.2 percent.

Australian markets ended sharply higher, led by energy, healthcare and consumer staple stocks on easing trade tensions.

The benchmark S&P/ASX 200 jumped 1.1 percent to 8,238, while the broader All Ordinaries Index closed up 1.1 percent at 8,456.20.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 index rallied 1.5 percent to 12,327.89.

Europe

European stocks have shown a strong move to the upside on Friday as most regional markets resumed trading after a holiday on Thursday for May Day.

Investors cheered signs of easing Sino-U.S. tensions after China said it has kept the door open for discussions with the United States.

At the same time, Beijing noted that the U.S. needs to show “sincerity” in negotiations and should be prepared to cancel its unilateral tariffs.

The German DAX Index is up by 1.8 percent, the French CAC 40 Index is up by 1.6 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

In corporate news, ING has moved sharply higher. The bank announced a fresh buyback of €2 billion after reporting strong first quarter results. Energy giant Shell has also rallied 3 on share buyback news.

Denmark’s Danske Bank has also shown a significant move to the upside after reporting forecast-beating first quarter profits.

On the other hand, education company Pearson has moved notably lower after underlying group sales rose 1 percent in the first quarter.

BASF SE has also moved the downside. The chemical giant has warned that it needs more time to assess the impact of U.S. tariffs.

U.S. Economic News

Job growth in the U.S. far exceeded economist estimates in the month of April, according to a closely watched report released by the Labor Department on Friday.

The Labor Department said non-farm payroll employment shot up by 177,000 jobs in April compared to expectations for an increase of about 130,000 jobs.

However, the jumps in employment in February and March were downwardly revised to 102,000 jobs and 185,000 jobs, respectively, reflecting a net downward revision of 58,000 jobs.

The report also said the unemployment rate came in at 4.2 percent in April, unchanged from the previous month and in line with economist estimates.

At 10 am ET, the Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of March. Factory orders are expected to surge by 4.5 percent in March after climbing by 0.6 percent in February.