Directionless Asia Waits On China, ECB Forecast Renews Growth Fear, Futures Point To Soft Open In US

Asian Markets Were Mixed On Thursday

Asian markets were mixed on Thursday despite a strong move in the regions leading communication technology conglomerate. Softbank has announced the largest share buyback program in the company’s history, worth about $5.46 billion, and sparked a 17% surge in shares of the Tokyo listed stock. The Nikkei, however, did not move higher showing caution within the broader market and posted a loss near -0.60%.

The Kospi reopened from the Lunar New Year Holiday to little fanfare. Trading was light, volume was low, and the index closed down -0.04%. In stock news, shares of chipmaker SK Hynix advanced 1.05% in a move echoing strong gains in US-listed chipmakers on Wednesday. Australia bucked the trend and moved higher, led by a1.75% increase in the financial sector, posting a 1.10% gain for the ASX 200. All sectors were positive.

ECB Bulletin Renews Fear Of Slowing Growth

The ECB released their first Economic Bulletin and Outlook for 2019 and the outlook is dire, sort of. The ECB has lowered their growth targets for this year and next as effects of geopolitical tensions drag on international business. The caveat is that economic expansion is still expected and underpinned by economic conditions (within the EU), favorable labor market conditions, and wage growth. The biggest fear is US/China trade relations, a factor that may improve significantly by the end of this month.

EU indices moved lower on the news after spending much of the morning in the red. The DAX extended a -1.0% loss to -1.80% at midday with the CAC not far behind at -1.2%. The FTSE was trading at a more moderate -0.35% but still down on the day. In the UK, the BOE decided to hold rates unchanged in a unanimous decision. There was a change in stance, noting downside risks, and weakened the pound versus the dollar.

Futures Point To Weak Open For US Stocks

Futures trading pointed to a weak open for US stocks on Thursday morning. The major indices were all indicated to open with losses in the range of -0.65% to -0.75 led by the tech-heavy NASDAQ Composite. The decline is due to earnings and Fed angst as a number of influential members are scheduled to speak. Members are expected to talk in favor of patience in regards to policy and rate-hike trajectory, talk that would weaken the dollar if not for the ECB and BOE dovishness.

In earnings news shares of Twitter were moving lower in early trading which added to the general aura of negativity in the market today. Twitter beat on the top and bottom lines but only a little, the problem is the company gave an unfavorable sales forecast that sent shares down by -8.0%. Earnings will remain in focus today and tomorrow as another couple dozen S&P 500 companies are scheduled to report. Other reports delivered before the bell were mixed, most produced earnings and/or revenue above expectations but weak, weaker, or weakening outlook weighed on share prices.