Investing.com -- The U.S. may be prepared to cancel some of its tariffs on Chinese imports to secure a trade truce, Uber (NYSE:UBER) continues to hemorrhage cash and OPEC trims its long-term forecasts for oil demand in its annual report. Here's what you need to know in financial markets on Tuesday, 5th November.
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1. U.S. to give ground on tariffs?
The U.S. may roll back some of the tariffs it imposed on Chinese imports in the course of the last 18 months in order to secure a temporary truce in its trade war with China, according to reports in the Financial Times and Wall Street Journal.
The newspapers both reported that Washington may annul the 15% tariff on goods including apparel, flatscreen monitors and other electrical appliances in September, in return for ‘beefed up commitments’ on respecting intellectual property rights and purchases of U.S. agricultural products.
Overnight, Chinese markets leaped as the central bank cut its one-year interest rate for the first time in three years to relieve a worsening liquidity situation in the local bond market. At the same time, President Xi Jinping promised that China would open its doors “ever wider” to global trade, but said nothing specific about the proposed deal with the U.S. The yuan responded by rising through 7 to the dollar for the first time since August.
2. Stocks to open higher
U.S. stock markets are set to extend their recent gains at the opening, on the back of Xi’s comments and the reports about the U.S.’s willingness to roll back tariffs.
By 6:30 AM ET (1100 GMT), Dow futures were up 61 points or 0.2%, while S&P 500 Futures and Nasdaq 100 futures were both up in line.
The trade détente is coming just at the right time: As of November 1, the blended earnings decline for the third quarter for the S&P 500 stood at -2.7%, according to FactSet. If that’s still the case at the end of the season, it will mark the first time the index has reported three straight quarters of year-over-year declines in earnings since the middle of 2016. It will also mark the largest year-over-year decline in earnings since Q2 2016, when earnings were down 3.2%.
The day’s earnings roster is headed by medical device maker Becton Dickinson, Allergan, gold miner Newmont Goldcorp, Tinder owner Match Group, Regeneron Pharma and aluminium products group Arconic.
3. Uber's still bleeding
Uber (NYSE:UBER) reported another thumping loss at the basic operating level, again raising questions over its path to profitability. The company lost $1.2 billion before interest, taxes, depreciation and amortization. That’s scarcely any improvement from the $1.3 billion it lost in the second quarter (excluding $3.9 billion in non-cash costs from its IPO).