US pre-open: Stocks seen higher on Sino-US optimism, ahead of ADP
US stocks looked set for a positive open on Wednesday, with sentiment likely to be underpinned by solid Chinese services data and optimism ahead of the resumption of Sino-US trade talks, as investors eyed the release of the ADP employment report.
At 1200 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.5%, while Nasdaq futures were 0.6% higher.
The upbeat tone followed a Financial Times report suggesting that a trade agreement between the US and China was 90% done as talks between the two were set to resume in Washington later in the day. The FT cited Myron Brilliant, executive vice president for international affairs at the US Chamber of Commerce as saying: "Ninety percent of the deal is done, but the last 10% is the hardest part, it's the trickiest part and it will require trade-offs on both sides."
According to the report, China still wants to remove existing tariffs on Chinese goods while the US wants China to agree a mechanism to ensure the enforcement of any deal.
Oanda analyst Craig Erlam said: "Obviously the last 10% was always likely to be the most challenging but we’re hearing nothing at the moment that suggests a deal is at risk, rather there’s a lot of optimism that it will get done. We’re just going to have to be a little patient."
Also likely to boost the mood was China's Caixin services purchasing managers' index, which rose to a 14-month high of 54.4 last month from 51.1 in February, beating expectations for a reading of 52.3.
Erlam said: "We’ve spent so long fretting about a Chinese slowdown and the impact that a prolonged trade war could have that this week’s data releases have come as something of a surprise. The services PMI capping things off, coming in well above expectations at 54.4 - the highest since January 2018 - is more than welcome."
In corporate news, Signet Jewelers was on the rise as its quarterly earnings beat expectations and sales fell less than forecast.
On the data front, all eyes will be on the ADP employment report ahead of Friday's non-farm payrolls report. It's expected to show that hiring remained strong in March, with another 175,000 forecast to have been added, down a touch from February's 183,000.