Futures Flat, Positive Trade News Lifts Sentiment, Growth Concerns Persist

The U.S. Futures Point To A Flat Open On Thursday

The U.S. equity futures were indicating a lower open on Thursday despite some much-needed news on trade. According to multiple sources, the Chinese have offered unprecedented concessions to the U.S. The concessions, primarily on tech and most importantly forced tech transfers, are in sharp contrast to previous news the Chinese were walking-back on a previous offer.

The trade news is the second in two days pointing to thawing tensions and de-escalation of the trade war. On Wednesday U.S. trade data revealed China had substantially increased its purchases of soybeans. Secretary of the Treasury Steve Mnuchin and Trade Ambassador Robert Lighthizer are in Beijing now. The two are slated to meet with Vice Premier Liu He overnight tonight.

Despite the trade news fear of slowing growth continues to weigh on the market. The drop in the 10-year treasury indicates fear of near-term slowdown persists. Today’s data, the final revision of 4th quarter GDP, came in about .20% below expectations but had little impact on trader sentiment.

EU Markets Rise On Trade News

The EU markets were largely higher on today’s trade news but the gains were capped by growth fears. The UK FTSE led with an advance of 0.50% after the county’s Parliament rejected Theresa May’s offer to quit. May had offered to resign her post should the MPs agree to accept her bill.

May’s rejection is at once a vote of confidence in her leadership and another setback for Brexit. The MPs voted last night on a number of issues trying to decide which direction to take. The results show a deep divide still remains and left the future of Brexit in question.

On the economic front, a round of weak data left traders concerned about the slowing global economy. A number of gauges measuring consumer confidence/sentiment, business sentiment, and inflation expectations all came in below expectations.

In stock news shares of Swedbank were halted amid allegations the bank was involved in money laundering. Shares of Evotec, a biotech firm, moved up 4.0% after guiding revenue and earnings estimates higher. The German international conglomerate Bayer fell -1.0% after a U.S. jury awarded $80 million to a man whose cancer was caused by Roundup.

Asia Mixed As Growth Concerns Persist

Indices in Asia were mixed in Thursday trading despite the positive spin on trade. The Shanghai Composite fell -0.92% but were led by a -1.61% decline in the Japanese Nikkei. Shares in Hong Kong were able to close modestly higher despite weak earnings from the China Construction Bank. Shares of ZTE, the world’s fourth-largest maker of telecom equipment, surged 10% after guiding revenue for the year sharply higher. The Australian ASX advanced about 0.65% while the Korean Kospi fell about -0.82%. Traders in the region will be paying close attention to trade developments and news that may be released overnight tonight.