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FOMC Dollar Down On FOMC Stance, ECB Signals No Changes, Asia Rises On Trade Hope

Global equity markets retreat after central banks signal no changes to policy should be expected.
Thomas Hughes
Powell

The U.S. Futures Are Lower On Thursday Morning

The U.S. futures are signaling a lower open for the U.S. markets on Thursday morning. The Dow and NASDAQ are evenly matched with losses near -0.17% while the S&P has shed a more modest -0.10%. The move comes a day after the FOMC indicated no change to policy should be expected until 2021 and confirms hesitation in the market. Before the Wednesday meeting traders had been expecting the Fed to hold rates steady for 6 to 8 months.

On the trade front, U.S. negotiators are expected to meet with President Trump sometime today. The meeting is expected to decide the fate of Sunday’s tariffs. Sunday is the deadline for the Phase One Trade Deal. If no trade deal is reached another round of tariffs will be imposed on Chinese goods. Shares of Apple are down on the news, and an analysts report stating the company’s iPhone sales slipped -35% over the last month. Apple’s stock is down more than -1.0% on the news.

In economic news, U.S. Producer Prices were unchanged in November and core inflation is weak. PPI ex-food and energy came in at -0.2% MOM and are up only 1.3% YOY. Headline PPI is up the same amount YOY.

EU Markets Fall, ECB Stands Pat

The EU markets are edging lower in midday trading following Christine Lagarde’s first meeting as ECB chief. The ECB chose to leave rates unchanged this month but says it stands ready to adjust all instruments should the need arise. Despite this, the new chief also says there are signs of stabilization in the data. The DAX and CAC are both down -0.10% at midday, the FTSE 100 is down about -0.40%.

In the UK trading action is dampened by today’s election. Today is the day of the snap-election that is intended to break a lingering stalemate in Parliament. At last count, polls were showing the Conservative Party in the lead by a few points. If the Conservatives can win a majority the UK may finally be able to complete its Brexit.

On the economic front, the Ifo Institute maintains its outlook for 2020 GDP growth at 1.1%. The institute also upgrades the outlook for 2021 to 1.5%, up a tenth from the last update. EU Industrial Production fell -0.5% over the last month and is down 2.2% YOY.

Asian Stocks Move Mostly Higher

Asian markets are mostly up at the end of the day on Thursday. The move was driven by strength in most major stocks including Tencent, Samsung, and SK Hynix. In South Korea, Samsung and SK Hynix are both up more than 2.5% at the end of the session. The Hong Kong market was led by Tencent and insurer AIA, up 3.0% and 2.3% respectively.

In index news, the Korean Kospi led with an advance of 1.51%. The Hong Kong Hang Seng came in second with a move of 1.31%. The Japanese Nikkei gained a tepid 0.14% while the Shanghai Composite and Australian ASX both posted modest declines.

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