Major U.S. stock market indexes jumped as investors expect Washington and Beijing to enter into an accord that will be ease the trade tensions between the economies. Notably, the Energy sector contributed the maximum to the S&P 500 index, followed by Financials.
Phase-One Trade Deal
The United States and China have reportedly agreed a phase-one trade agreement in principle. However, the deal awaits consent from President Donald Trump.
Importantly, the Trump administration has agreed to avert duties of 15% on $160 billion of consumer goods from China that were scheduled to take effect on Dec 15, per CNBC. The United States has also decided to slash the existing tariff by 50% on $360 billion of Chinese products, added CNBC. Reportedly, the Trump administration wants China to buy more of its agricultural products.
Energy Stocks to Gain
Optimism in the trade war front is likely to prove favorable for upstream energy players and oilfield service providers. Moreover, there is room for oil prices increase as the possibility of a trade deal will boost the global energy demand. Currently, West Texas Intermediate is approaching $60 per barrel.
Investors should know that higher oil prices will encourage explorers to produce more of the commodity, while the oilfield service firms are likely to get more contracts from upstream energy players.
Oilfield service players that have gained considerably owing to trade optimism include Halliburton Company (HAL - Free Report) . The stock carries a Zacks Rank #3 (Hold) and has gained 3.9% on Dec 12. Oil and gas explorers that have gained considerably are EOG Resources, Inc. (EOG - Free Report) , Marathon Oil Corp. (MRO - Free Report) and Devon Energy Corp. (DVN - Free Report) at 2.7%, 3.3% and 2.8%, respectively.
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