US pre-open: Stocks to nudge up ahead of payrolls amid Sino-US progress

US stock futures pointed to modest gains at the open on Friday as investors welcomed progress in Sino-US trade talks but refrained from making any big bets ahead of the release of the latest non-farm payrolls report.

At 1220 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.1%, while Nasdaq futures were 0.2% firmer.

Market participants will be digesting comments from US President Trump, who said on Thursday after a meeting with Chinese vice Premier Liu He that a trade deal between the two nations was about four weeks away, with some sticking points remaining. Trump said the two sides had agreed "a lot of the most difficult points" but still had some way to go.

"Confidence is reaching new levels that a trade deal will eventually be signed after many months of protracted negotiations," said FXTM research analyst Lukman Otunuga.

"We believe that once the US-China trade deal is eventually announced, that could release pent-up demand and trigger a knee-jerk jump in risk-on assets. However, whether such gains are sustained depends on how markets interpret the technicalities of the deal, and what it means for a slowing global economy. As the saying goes, the devil is in the details."

All eyes will be on the release of the non-farm payrolls report, unemployment rate and average earnings at 1330 BST.

Payrolls are expected to have risen by around 180,000 following a very weak release in February, which showed an increase of just 20,000. Meanwhile, the unemployment rate is expected to hold steady at 3.8% and the annual average earnings rate is tipped to remain at 3.4%. On a monthly basis, it is expected to be 0.3%, down from 0.4% in February.

Oanda analyst Craig Erlam said: "Broadly speaking the labour market remains very strong and the economy, while slowing, is very healthy. With unemployment running at only 3.8% and wages rising at 3.4% annually, there’s clearly nothing to worry about just yet. That said, the US is not immune from the global slowdown and investors will only accept weak job growth for so long.

"It will be interesting to see what happens today if we get another bad reading, especially if it isn’t accompanied by a big revision to the February number. The market is not expecting this though, with around 180,000 forecast."