U.S. Stock Futures Gain on Bets Tariffs Will be Delayed

By Anna Isaac   U.S. stock futures reversed course Tuesday and posted gains after The

Wall Street Journal reported that U.S. and Chinese trade negotiators were looking to delay fresh tariffs.

Futures tied to the Dow Jones Industrial Average gained 0.1%, bouncing back from earlier declines. The pan-continental Stoxx Europe 600 pared earlier losses to trade down 0.4%.

The U.S. and China are working toward postponing tariffs on $165 billion of Chinese goods that are set to kick in on Dec. 15, according to officials on both sides. The world's two largest economies are continuing to haggle over how to get Beijing to commit to massive purchases of U.S. farm products, the people said. President Trump is insisting on the commitments on agricultural products before he strikes a so-called phase-one deal.

Chinese and U.S. officials involved in the talks say they don't have a hard deadline for an initial deal, and officials on both sides have signaled that Sunday isn't the final date. That deadline could be extended, as has happened several times when the two sides thought they were on the verge of a deal.

"A lot of different options are still on the table, we just don't know what's going to happen," said Oliver Jones, market economist at Capital Economics. "At one end of the spectrum there's a deal and the tariffs roll back. But just last week we had Trump's remarks that there might not be a deal until after the election."

Meanwhile, U.S. lawmakers are taking aim at China with a new bill that would bar the use of federal funds to buy Chinese buses and railcars, congressional aides familiar with the matter told The Wall Street Journal. That may complicate Mr. Trump's efforts to reach an initial trade agreement, which would bring to a halt tensions that have made markets jittery for much of the year.

Over in China, the government last year introduced a sweeping policy to curtail its use of foreign technology products by awarding more contracts to domestic suppliers, people familiar with the matter said. The initiative, which hadn't been made public, may help China double down on its efforts to decouple its technology sector from the U.S.

Markets have been parsing such signals as they try to gauge the potential outcome of the trade negotiations, though some investors say a degree of fatigue has also set in.

"The outcome really does impact equity markets one way or another, it impacts the earnings of big tech companies and manufacturers," Mr. Jones said.

Ahead of the New York opening bell, shares in NortonLifeLock climbed over 4% after The Wall Street Journal reported that the consumer-software company has attracted deal interest from a range of companies including rival McAfee.

AutoZone shares rose almost 6% in premarket trading after the car-parts retailer's profit beat estimates for the quarter. Regeneron dropped 3.7% after French drugmaker Sanofi said it may sell its stake in the U.S. biotech company.

Within European equities, Sanofi climbed over 4% in Paris after the company said it would stop its research efforts in the challenging field of diabetes, and offered a bullish forecast for its star drug Dupixent.

The U.K.'s FTSE 100 index dropped 0.4%. Britain is preparing to head to the polls Thursday for a crucial election.

Federal Reserve officials are poised to begin a two-day meeting Tuesday, where they are expected to decide to hold steady on interest rates as Friday's strong jobs report will likely reassure policy makers about the strength of the economy.

Write to Anna Isaac at anna.isaac@wsj.com

(END) Dow Jones Newswires

December 10, 2019 09:21 ET (14:21 GMT)

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