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Global stocks rise and oil gains after Biden’s phone call to Xi Jinping lifts hopes for trade relations

US stocks look set to reverse recent losses after the US and Chinese leaders discussed the need to ensure competition does not veer into conflict. ...
President Joe Biden and Chinese President Xi Jinping.
President Joe Biden and Chinese President Xi Jinping.

  • Global stocks rose Friday, as a call between Joe Biden and Xi Jingping lifted hopes for trade between the leading economies.
  • The US and Chinese leaders discussed their countries' responsibility to ensure competition doesn't veer into conflict.
  • US stocks look set to retrace losses, while oil prices also recovered from a sell-off Thursday.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Global stocks rose Friday after President Joe Biden and Chinese leader Xi Jinping held their first talks in seven months, a warming of relations between the world's two biggest economies seen as hopeful for global trade.

Dow Jones futures moved 0.4% higher, while those on the S&P 500 and the tech-heavy Nasdaq each gained 0.3% as of 5:55 a.m. ET, suggesting a turn higher for US stocks when trading starts later in the day.

On Thursday, the three major US stock indexes closed lower after jobless claims data stoked concerns about global growth and the Federal Reserve winding down stimulus, the dominant story in markets this week.

In their call, Biden and Xi discussed "the responsibility of both nations to ensure competition does not veer into conflict," according to a White House transcript release.

The reportedly respectful tone of the talks helped drive gains in Asian equities to end the week. The Shanghai Composite put on 0.2%, and Hong Kong's Hang Seng jumped 1.8%, while Tokyo's Nikkei rose 1.2%.

That relief in Asia should be a powerful enough incentive for New York stocks to open higher, and should provide momentum for oil prices, according to Jeffrey Halley, a senior market analyst at Oanda.

"The Biden/Xi phone call has had the same effect on oil markets as it has other asset classes, with any hope that US/China relations, no matter how small, are construed as positive for global trade and basically almost every asset," Halley said in a note Friday.

Oil prices were recovering from Thursday's sell-off, which came after China said it will release crude oil reserves in a bit to ease raw-material prices for manufacturers. Brent crude gained 1.7% to reach $72.73 a barrel, and West Texas Intermediate rose 1.7% to $69.33 a barrel.

In London, the FTSE 100 was up 0.2%, shrugging off July data that showed the UK economy barely grew. Rising COVID-19 cases and supply-chain issues kept GDP to a 0.1% rise compared with 0.6% expected and a 1% gain in June.

European equities also followed Asia higher, with the Euro Stoxx 50 rising 0.4%, and Frankfurt's DAX advancing 0.2%. Markets were unruffled by the European Central Bank's announcement Thursday that it would modestly reduce the pace of pandemic emergency asset purchases.

Looking ahead, the main data highlight Friday is likely to be the US producer price inflation release for August, due at 8.30 a.m. ET.

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