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Top 5 Things to Know in the Market on Friday

Investing.com - Here are the top five things you need to know in financial markets on Friday, Feb. 22:

1. Trump set to meet with China’s top trade negotiator

U.S. President Donald Trump was reportedly set to meet with China’s top trade negotiator, Chinese Vice Premier Liu He, as the world’s two largest economies scramble to reach a trade deal before the U.S. increases tariffs on around $200 billion in Chinese imports on the March 1 deadline.

During this week’s discussions between high level officials, negotiators were reportedly working on memorandums of understanding that would focus on structural changes in China’s economy.

These would cover several areas including forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade.

Markets have been closely following the standoff between China and the U.S. amid concerns of the negative impact on the global economy and the meeting between Trump and Liu is taken as a sign of progress in reaching a deal.

2. Global stocks move higher on U.S.-China trade progress

Reports of the meeting between Trump and Liu buoyed global stocks on Friday, with China’s Shanghai Composite rise of nearly 2% leading more widespread gains in Asia.

A positive balance on earnings added to trade hopes in Europe. The pan-European Euro Stoxx 50 gained 0.5%, while Germany’s Dax and London’s FTSE 100 were up around 0.7% and 0.5%, respectively..

Buying returned to Wall Street after weak U.S. economic data out Thursday dampened sentiment, leading to the first decline in the S&P 500 this week. U.S. futures pointed to a higher open as investors looked ahead to news of progress in Sino-U.S. talks with just a week left until the March 1 deadline. At 5:53 AM ET (10:53 GMT), the blue-chip Dow futures gained 122 points, or 0.47%, S&P 500 futures rose 12 points, or 0.43%, while the Nasdaq 100 futures traded up 39 points to 0.55%.

Read more: The Smarter Alternative To Chasing Prices Higher As Stocks Rally Endures - Jani Ziedins

3. U.S. dollar on hold ahead of deluge of Fed speakers

With no major economic reports on Friday’s docket, markets will focus on a series of appearances from Federal Reserve officials at the U.S. Monetary Policy Forum, where they are expected to strengthen guidance that the central bank will put an end to shrinking its balance sheet this year.

Following several recent remarks towards that end from various Fed officials who had telegraphed the message, the minutes from the last monetary policy meeting released this week confirmed that “almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year”.

The focus will likely center on the panel discussion titled “The Future of the Federal Reserve's Balance Sheet” that will include St. Louis Fed president James Bullard and Fed governor Randal Quarles, while Philadelphia Fed chief Patrick Harker will moderate the discussion.

Other Fed officials scheduled to appear include vice chair Richard Clarida, San Francisco Fed president Mary Daly and New York Fed chief John Williams.

European Central Bank President Mario Draghi is also scheduled to deliver a speech in Italy at 11.15 AM ET.

The about face in the Fed’s outlook has taken its toll on the U.S. dollar, which was facing its first weekly loss in a month. At 5:55 AM ET (10:55 GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.01% at 96.48.

4. Oil on track for second consecutive weekly gain

Oil prices headed higher on Friday, on track for a second consecutive weekly rise, as progress in U.S.-China trade talks adjusted expectations for global demand higher in the hope of a deal.

Evidence that trade tensions between the world’s two largest economies may be thawing, together with OPEC-led production cuts, have translated into a rally of more than 20% this year, though concerns remain over surging U.S. production.

The Energy Information Administration reported Thursday that weekly production stateside hit a record high of 12.0 million barrels per day.

In that light, investors will pay close attention as Baker Hughes releases its weekly rig count data, an early indicator of future output, at 1:00 PM ET (18:00 GMT).

5. Europe hopes to reach trade deal with Trump this year

European Union Trade Commissioner Cecilia Malmstrom said Friday that a trans-Atlantic trade deal could be achieved before year-end, as the economic bloc hopes to avoid the threat of U.S. automotive tariffs.

“I think it can be done during this mandate,” Malmstrom told reporters on Friday ahead of a meeting of ministers.

European ministers will begin debating on Friday how and when to start trade negotiations with the U.S.

The European Commission has asked the EU's 28 countries to approve two negotiating mandates so that formal talks can begin.

The U.S. and Europe ended a stand-off of several months last July, when Trump agreed to hold off on car tariffs while the two sides looked to improve trade ties.

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