Earnings Hopes Lifts Futures, Politics Weighs On EU, STAR Market Opens But Asian Markets Fall

Global markets are mixed in Monday trading as FOMC hopes wane and earnings season kicks into high-gear.
Thomas Hughes

The U.S. Futures Are Up In Early Monday Trading

The U.S. futures are up in early Monday trading as earnings hopes and FOMC reality support prices. This week is one of the busiest of the reporting cycle with more than 25% of the S&P 500 issuing earnings reports. Topping the list of expected reports are those from Facebook, Amazon, and Apple, three-fifths of FAANG, with Google reporting next week. Netflix already issued a disappointing report, if the others do the same it could lead the entire tech-complex lower.

This morning’s earnings news includes reports from oil-field services company Haliburton and egg-producer Cal-Maine. Haliburton reported better than expected results driven by international demand, not surprising given last week’s report from Schlumberger. Shares of Haliburton were moving higher on the news. Cal-Maine, however, reported weaker than expected results and cut the dividend sending shares down more than -5.0%.

The Chicago National Activity Index ticked up to -0.02 from -0.03 over the last month. The index is a broad measure of U.S. economic activity and shows expansion continues on-trend. Later this week traders will be looking for the 1st estimate for 2nd quarter GDP. The consensus is 2.1%, down a full percentage point from the previous quarter, and the lowest level since early 2017.

EU Up But Politics Cap Gains

EU markets are up modestly at midday on Monday. The FTSE 100 is in the lead with a gain of 0.32%, the DAX is runner up at 0.27%, and the CAC is lagging at 0.21%. Gains are driven by earnings hope but capped by tensions centered on the UK Theresa May is to hold an emergency meeting on what to do about Iran. Iran seized a UK flagged tanker last week in the Gulf of Hormuz upping the stakes in a growing stand-off. May is to be replaced as PM soon, as early as tomorrow, and Boris Johnson is the still the front-running candidate. Parliament is slated to hold their vote sometime today.

In stock news, the energy sector led today’s losers with an average decline of -1.5%. The move is driven by uncertainty in oil markets driven by the Iran situation. Healthcare company Phillips reported a strong EPS beat that sent shares up 4.0%. The company reported high demand and is expecting strength later this year. Shares of Remy Cointreau fell more than -3.0% after Bank of American Merrill Lynch downgraded the stock.

Asia Falls Despite Surging STAR Market

Asian markets fall broadly despite a surge in the newly opened STAR market. The STAR market is China’s answer to NASDAQ’s popular listing style. Shares of STAR-listed stocks surged due to massive over-subscription. Despite this, the Shanghai and Hang Seng both fell about -1.30% while others in the region fell -0.05% to -0.25%.

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