Futures Edge Higher, Trade Hopes Simmer, Global Activity Continues To Slow

Global markets edge higher on hopes and earnings but neither the trade deal outlook or earnings growth is very good.
Thomas Hughes
Wall Street Buildings

The U.S. Market Is Up, New All-Time Highs At Hand

The U.S. futures are up in early trading as earnings and trade hope fuel optimism. On the earnings front, about 75% of the S&P 500 has reported and the bulk of companies have beaten expectations. The overhanging shadow, however, is that estimates for future growth continue to fall. At the current rate of decline full-year 2019 EPS growth is likely to turn negative by the end of the year. In trade news, China’s Xi Jinping spoke at the China International Import-Export Expo. He says world parties must work together to resolve trade issues and remove tariffs. With the APAC meeting canceled, the two sides are looking for a venue for both Presidents to meet, there is no date as yet.

The Dow Jones Industrial Average is up about 0.28% in early Tuesday trading while the S&P 500 and NASDAQ Composite are close behind. In stock news, IPO darling Peloton doubled revenue and earnings over the past year and stocks moved higher. In economic news, the U.S. trade deficit came in a little larger than expected but at a 7-month low. Later in the session traders will be on the lookout for Composite and Services PMI as well as the ISM Services report.

Europe Moves Up, UK Elections Coming Into Focus

European markets are moving higher in early trading. Trade hopes and earnings are lifting sentiment but Brexit woes continue to drag on the market. With the snap-election only a month away pundits have begun to wonder if it will make a difference. Even if Johnson wins a clear majority he still faces intense opposition from within his own party. The FTSE is in the lead at midday with a gain of 0.30% while the CAC and DAX trail with gains of 0.25% and 0.05%.

In stock news, shares of Pandora are down more than -15% after the company reported earnings. Earnings and revenue fell from the year-ago period and missed investor expectations. In economic news, EU services PMI rose to 50.0 from last month’s 49.5, showing some stabilization within the economy. The Composite PMI remains below 50 due to weakness in the manufacturing economy. In the UK, consumer spending rose to a 6-month high but is only flat from the year-ago period.

Asia Up After Wall Street Sets New Highs

Asian markets are up after Wall Street set new all-time highs. The Japanese Nikkie led with a gain of 1.76% as it set a high for 2019. Other markets in the region were less buoyant but still advanced an average of 0.50%. In China, the Caixin small-cap Services PMI came in at 51.1, an 8-month low but still positive. In Australia, the RBA held its key rates unchanged but remains ready to cut rates if needed.

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