Wall Street set for higher open as trade war fears ebb

(Reuters) - U.S. stock index futures pointed to a slightly higher open on Tuesday on hopes that a trade agreement between the United States and Mexico will go some way to averting a global trade war.

Traders work on the floor at the New York Stock Exchange (NYSE) at the end of the day's trading in Manhattan, New York, U.S., August 27, 2018. REUTERS/Andrew Kelly

The benchmark S&P 500 and the Nasdaq indexes hit all-time highs on Monday after the two countries agreed to overhaul the North American Free Trade Agreement, putting pressure on Canada to remain part of the three-nation pact.

Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday. Her spokesman said Canada would sign only a new agreement that is good for the country.

U.S. President Donald Trump and German Chancellor Angela Merkel spoke by telephone and the two leaders “strongly supported ongoing discussions” on trade, according to the White House.

“The markets have been on fire and are being fueled by economic optimism and the fears of tariffs have been subsiding,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“Trump is getting things done like he had promised and the markets like that because it removes the uncertainty of a trade war,” Bakhos added.

The gainers in premarket trading included the trade-sensitive heavy machinery maker, Caterpillar (CAT.N), which was up 0.5 percent. Automakers General Motors (GM.N), Ford (F.N) and Fiat-Chrysler (FCAU.N) were up between 0.29 percent and 1.25 percent.

At 8:30 a.m. ET, Dow e-minis 1YMc1 were up 42 points, or 0.16 percent. S&P 500 e-minis ESc1 were up 4 points, or 0.14 percent and Nasdaq 100 e-minis NQc1 were up 21.5 points, or 0.28 percent.

Tiffany & Co (TIF.N) climbed 7.1 percent, the most among S&P 500 components trading premarket, after the luxury retailer topped quarterly same-store estimates and raised its full-year profit forecast on strong sales in the Americas and Asia-Pacific regions.

Best Buy (BBY.N) fell 5.1 percent, the most among S&P 500 components trading premarket, after the electronics retailer’s quarterly online sales growth slowed and its current-quarter profit forecast missed estimates.

Coty (COTY.N) rose 5.8 percent and Estee Lauder (EL.N) gained 2.6 percent after Morgan Stanley upgraded the shares of the beauty products makers.

Xilinx (XLNX.O) gained 2.8 percent after Baird upgraded the chipmaker’s shares, citing an expected ramp-up in 5G-related shipments later this year.

Chip equipment maker Applied Materials (AMAT.O) fell 1.1 percent and Lam Research (LRCX.O) dropped 1.3 percent after GlobalFoundries, the world’s No.2 contract chipmaker, said it would stop development of next-gen chipmaking technology.

Campbell Soup (CPB.N) fell 4.5 percent on a New York Post report that the soup maker does not plan to sell itself to a strategic buyer.

The Conference Board is expected to report its consumer confidence index for the month of August at 10 a.m. ET.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta

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