Futures Fall After China Casts Doubts On A Trade Deal, Inflation Slows, Earnings Still In Focus

Markets pull back from their highs as doubts about a U.S./China trade deal intensify.
Thomas Hughes
Wall street in New York

Futures Fall As Trade-Related Doubts Intensify

The U.S. market is indicated to open lower on Thursday after China cast doubt on the possibility a long-term trade deal was possible. The news soured sentiment recently lifted by growing optimism the Phase One deal would be finalized. The news from China cites unnamed sources but official sources close to the negotiations. Traders are cautioned to keep in mind that even if a Phase One deal is signed it is unlikely to alter the current state of global trade. At best, the Phase One deal will alleviate uncertainty and cement the new status quo.

The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite are all down about -0.10% to -0.20%. The NASDAQ Composite is buoyed by results from Apple and Facebook. Both tech companies reported better than expected top and bottom-line results and saw their shares move higher. Apple shares advanced about 1.70% while Facebook surged more than 4.0%.

In economic news, September Income and Spending figures came in as expected. Income rose 0.3% while spending advanced 0.20%. On the inflation front, PCE prices rose 0.0% on top of last month’s 0.0%. Jobless claims data was also tepid, claims rose slightly but remain near the long-term low.

EU Markets Are Flat And Down At Midday

The EU markets are flat and down at midday as traders digest the FOMC policy statement, the trade news, and the onset of intense campaigning in the UK. The FOMC cut rates as expected but indicated a pause. The committee has returned to its wait-and-see stance and will require a significant change in the inflation data to move again. The long-term outlook remains hawkish, the U.S. economy continues to expand so higher rates are more likely than not.

In local news, today marks the first full day of campaigning for UK Prime Minister Boris Johnson and his rivals. The general election is slated for early December and may well serve as a 2nd referendum on Brexit. If Johnson wins his majority he will be able to usher the UK to Brexit unhindered. The UK FTSE 100 is the loss-leader with a decline of -0.90% while the DAX and CAC are trading much closer to break-even.

Asian Markets Are Mixed

The Asia markets are mixed at the end of Thursday’s trading. The FOMC meeting was and was not what the market wanted. The easy-money policy is good but the seeming lack of guidance on future moves has left global markets wary. The Australian ASX is the biggest loser in Thursday’s action and down -0.39%. The Shanghai Composite is close behind at -0.35%. The Hong Kong Hang Seng is the biggest gainer and up 0.90% while the Nikkei and Kospi trail with advances near 0.25%.

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