US open: Stocks higher following promising statements from China

US stocks recorded some gains early on Tuesday following a late recovery in the previous session, despite a former Canadian diplomat being detained in China amid a diplomatic spat over Asian telecom giant Huawei.

At 1500 GMT, the Dow Jones was 1.17% higher at 24,707.85, while the S&P 500 had gained 1.28% to 2,671.58 and the Nasdaq moved 1.43% firer to 7,121.09.

The mood was lifted after China's commerce ministry said that Chinese Vice Premier Liu He spoke to US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer on a call on Tuesday morning, launching formal talks.

Donald Trump tweeted: "Very productive conversations going on with China! Watch for some important announcements!"

Oanda analyst Craig Erlam said: "We’re now seeing daily commentary it seems about the progress of talks between the US and China but the reality is that this is going to be a process that moves at a glacial pace but the fact that talks are happening are a reason to be optimistic."

However, it was later revealed that a former Canadian diplomat had been detained in China, with his current employer, the International Crisis Group, demanding his prompt and safe release.

Michael Kovrig’s detention comes shortly after police in Canada arrested the chief financial officer of China’s Huawei Technologies on 1 December at the request of US authorities, infuriating Beijing in the process.

In other Trump news, the President is reportedly concerned there is a “real possibility” he could be impeached once Democrats take the House of Representatives, CNN said on Monday.

A source close to the president revealed that although Trump is concerned there is a possibility of impeachment, he is not certain it will happen since the Senate remains unturned.

Elsewhere on the corporate front, DSW shares surged 6.79% in early trade after well-received third-quarter results.

Biopharmaceutical outfit Entera saw its shares jump 11.5% after revealing a collaboration agreement with Amgen.

Seagate and AMD were both 2.2% higher after semiconductor stocks traded higher on the back of news of renewed US-China trade talks.

On the macro front, small business sentiment in the US deteriorated more than expected in November, according to the National Federation of Independent Business.

The small business optimism index fell to 104.8 last month from 107.4 in October, missing expectations for a dip to 107.0.

"Small business owners are enthusiastic about the economy and have demonstrated their optimism by raising wages, creating new jobs, and investing in their businesses throughout 2018," said NFIB President and CEO Juanita D. Duggan.

"Overall, small business owners have shown a historic trend in optimism for their businesses and the economy and continue to be the driving force behind economic growth."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Capex aside, this survey looks like a softening, but this is not an interest rate-driven end-of-the-cycle rollover; it has been triggered by the drop in stock prices, which in large part reflects the trade war with China.

"If that problem is solved, as we expect, the stock market will rebound, dragging the NFIB back up."

Elsewhere, wholesale inflation in the States fell back last month as goods and energy prices receded, but printed ahead of forecasts at the so-called 'core' level.

According to the Department of Labor, so-called final demand prices edged higher by 0.1% month-on-month in November (consensus: 0.0%) on the back of a 1.3% jump in food costs.

Versus October, goods prices fell by 0.4% while those for services were up by 0.3%.

Within the former, energy prices slumped by 5.0%.

In October, total final demand prices had gained 0.6%.