Futures Rise On Hope, Brexit Drama Intensifies Again, China GDP Outlook Downgraded By IMF

Markets rise on lingering hope for trade and Brexit deals, but don’t bet on a major rally without earnings to support it.
Thomas Hughes
US MAJOR INDEXES RETEST CRITICAL PRICE CHANNEL RESISTANCE

The U.S. Market Is Up, Earnings Are In Focus

The U.S. futures are indicated higher on Monday morning as traders turn their attention to earnings. The 3Q earnings season got off to a decent start last week with 80% of those reporting beating their EPS consensus estimate. The problem is that most companies beat their estimates by a much smaller margin than in the past even as revenues rise. This week the market is looking for reports from over 100 S&P 500 companies and a handful of Dow components. The NASDAQ Composite is in the lead with a gain of 0.40% while the S&P 500 is up 0.30% and the Dow 0.20%.

In earnings news, shares of Lennox are moving lower in early pre-market action after the company lowered its full-year guidance. Shares of Haliburton are flat after the company reported revenue and EPS missed consensus. Across the pond, shares of software giant SAP are up sharply after it reported better than expected revenue. Later this week traders will be looking for reports from McDonald’s, United Technologies, Harley Davidson, AT&T, and Ford.

EU Markets Rise As Brexit Uncertainty Resurfaces

The EU markets are broadly higher in early Monday trading even as Brexit uncertainty intensifies. A newly-negotiated deal with the EU has been put on hold by Parliament. Parliament voted to force PM Boris Johnson to request another extension despite his pledge to never do said action. Johnson is expected to push for a second vote early this week. The EU is expected to respond to the extension request as early as today. The DAX is in the lead at midday with a gain of 0.90% while the FTSE and CAC are trailing with advances closer to 0.25%.

In stock news, shares of Germany’s Wirecard are up more than 8.0%. The company says it will begin an independent 3rd party audit of its financial practices following a report in the Financial Times. The FT alleged WireCard is engaging in fraudulent activities. Shares of Tomra Systems are also up 8%, it reported strong 3rd quarter results.

Asia Flat, Mixed In Monday Trading

Asian markets are flat and mixed at the end of the Monday session. Trading was supported by increasing hope a trade deal is at hand although there is still no indication of when it will emerge. On Friday, Chinese Vice Premier Liu He revealed the two sides had made substantial progress and would continue to work together to solve differences. In other news, the IMF downgraded China’s GDP outlook saying activity could fall below 6.0% growth in 2020. The Nikkei led in Monday action with a gain of 0.25% while most others closed within 0.05% of flat.

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