Futures Flat, ECB Meeting Comes Into Focus, Chinese Inflation Weaker Than Expected

The global rally falters as central banks, economic data, and earnings outlook drag on equities.
Thomas Hughes
ECB

The U.S. Futures Are Flat and Mixed In Early Tuesday Trading

The U.S. futures are indicating a flat to slightly lower open on Tuesday after Monday’s rally fizzled out. The Dow Jones Industrial Average, S&P 500, and and NASDAQ Composite are all hugging the flat-line in early pre-opening action. Tech is in the lead, led by shares of FAANG which are down an average -0.30%. While trade optimism is supporting prices, concern about central bankers and earnings continue to weigh on the market. In trade news, Secretary of the Treasury Steven Mnuchin says there is a conceptual agreement on the intellectual property although other issues remain.

In stock news, Target shares are moving higher after the company says it will hire up to 130,000 holiday-employees this year. The figure is well above last year’s figure and suggests strong retail sales later this year. Shares of Ford are moving lower in early action after Moody’s downgraded the company’s credit rating to junk status. The downgrade is driven by weaker than expected margin and revenue. Later today, traders will be on the alert for the JOLTs report at 10 AM and the Apple product launch event.

Europe Flat, Brexit Stalemate Assures Volatility Ahead

European markets are flat and mixed at midday on Tuesday. The DAX leads with a gain of 0.27% while the CAC and FTSE are posting moves closer to 0.10 and -0.10%. The dominant news story, aside from global trade-driven angst, is a stalemate within the British Government. PM Boris Johnson has re-vowed to not delay the Brexit past the October 31st deadline, a statement in direct contrast to Parliaments wishes. Parliament has passed a law forcing Johnson to delay the Brexit if no new deal can be reached.

In stock news, shares of JD Sports shot to the top of the rankings. The UK-based sporting goods company reported better than expected first-half results and sent its shares up more than 6%.

Traders are also closely watching the ECB. The ECB began the September policy meeting this morning and will announce their next policy move tomorrow. The bank is expected to cut rates and enact some other form of stimulus, the details and quantities are still uncertain.

Asian Markets Mixed, Chinese Data Is Weak

Asian markets are mixed after Tuesday’s volatile session. The Nikkei, Hang Seng, and Kospi all posted gains while he Shanghai and ASX both posted losses. Gains ranged from 0.03% to 0.62% for the Kospi while the Shanghai Composite fell -0.12% and the ASX -0.51%. In China, the action was driven by inflation data that reveals weakness within the broad economy. PPI fell -0.8%, a bit less than expected, but the worst decline in three years. CPI rose 2.8% but that is due primarily to a 10% increase in food inflation that is in turn driven by a roughly 50% increase in pork prices. Pork prices are on the rise because of last year’s virulent outbreak of swine flu.

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