The S&P 500 has now declined six out of the last seven trading days. After a more than 10% rise to start the year, the advance of US stocks has been impeded by worries ranging from Chinese tech firm Huawei's decision to sue the US ahead of the Trump-Xi meeting at the end of March to the abrupt end to the US summit with North Korea.

S&P 500 futures are pointing to a 0.3% decline at market open. However, despite these negative headlines, there are still factors that could push stocks higher:

* Not all of the economic data has been disappointing. The Federal Reserve's Beige Book suggests that overall economic conditions remain strong and temporary factors likely hurt GDP growth in 1Q19. In the Eurozone, services and composite PMIs for February were revised up, putting the composite measure at 51.9 and breaking a run of five consecutive monthly declines. In Germany, car sales rose 3% y/y last month, in contrast to January's decline. Chinese credit growth has shown signs of recovery – January total social financing growth ticked up to 10.4% y/y from a record low of 9.8% in December.

* Global central banks remain determined to support growth. New York Fed President John Williams, yesterday, reiterated the Fed’s data dependence while flagging that the current fed funds rate is neutral. The European Central Bank (ECB) could announce another round of loans for banks at its policy meeting today, according to Bloomberg. And Chinese policymakers have announced tax and fee cuts of CNY 2trn at the National People’s Congress and hinted at monetary policy being prudent and “neither too tight nor too loose”.

* US-China trade deal could provide fresh impetus to stocks. Our base case is for a partial deal to be reached in late March that could include a rollback of select tariffs by the US in exchange for China increasing imports of US goods, granting more market access to US companies and pledging to curb intellectual property abuses. A South China Morning Post report suggests that China might institute new rules to protect foreign investors from forced technology transfers to their Chinese partners. Such a move could help US President Donald Trump sell a negotiated deal as a “win”. But there are chances of a potential mishap as in the case of the US-North Korea talks.

While we maintain our upbeat stance, there are still risks on the table, including renewed Fed tightening if inflation moves higher, a breakdown in US-China trade talks and a maturing US credit cycle. So we advocate protecting against them by hedging where possible.