Asian Mixed In Post-Holiday Trading, European Stocks Move Higher, Trade Talks Still In FocusMore than 66% of the S&P 500 have reported so far for the fourth quarter and the results are better than expected.
China Moves Higher On The First Trading Day Of The Year Of The Pig
Asian markets were mixed in Monday trading as markets wake up from last week’s Lunar New Year Holiday. Chinese markets led with gains greater than 1.25% and were followed by a less-robust 0.71% for the Hong Kong Heng Seng. The Australian ASX and Korean Kospi both posted moved less than 0.20% although one was up (the Kospi) and one was down (the ASX). Japan was closed for their Founder’s Day Celebration marking the anniversary of Japan as a nation.
In stock news, shares of Hong Kong-listed Tencent rose nearly 2.0% in Monday trading as tech led gains.
Market focus this week will be on the US/China trade talks scheduled for later this week. The talks are in Beijing and follow-up on a meeting held two weeks ago in Washington. The US is sending Secretary of the Treasury Steve Mnuchin and Lead Trade Negotiator Robert Lighthizer to the latest round of talks in effort to smooth out hurdles to reaching a trade deal. Last week US officials let it be known there was no Trump/Xi meeting on the table yet.
European Markets Move Higher On Trade Optimism
European indices moved higher in early Monday trading despite the cautionary tone from Washington. Traders in the region believe China and the US are on course to reach a trade deal even if the timing remains uncertain. Both nations are at risk of economic recession if a deal is not reached so incentivized to make concessions.
The French CAC led the gains with an advance of 1.10% as banks move solidly higher throughout the region. The DAX posted the second-largest advance in midmorning, about 1.0%, while the UK FTSE 100 came in at a slightly tepid 0.75%. Banks across the EU got a boost from good news in Italy. The EU just issued new capital requirements for the Italian banks and the news is good. Shares of most banks were up at least 1.0% with those in Italy advancing the most.
US Futures Move Higher
US futures move higher, pointing to a positive opening for US markets, on trade optimism despite a growing chance there will be another government shutdown. A key US Senator, Richard Shelby, has told reporters that the talks are stalled on immigration issues, the very issues that led to the longest shutdown in US history.
In trade news, there is not a lot of expectation on this week’s meeting, not anymore, but the market is still looking for positive development. Last week’s remarks from Larry Kudlow put the market back in its place but did not alter the outlook that trade relations are on the upswing.
In earnings news, more than 66% of the S&P 500 have reported so far for the fourth quarter and the results are better than expected. The problem is the outlook for earnings growth continues to suffer under the weight of trade tariffs and that will keep stocks under pressure in the near-term. There is not much data due out this week and what there is may be delayed because of the last government shutdown.