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Futures Rise On Trade Hopes, Consumer Spending Comes In Hot, Brexit Drama Continues

The global markets are extending Thursday’s gains after some positive talk on trade lifts sentiment.
Thomas Hughes

The U.S. Futures Are Up In Early Friday Trading

The U.S. futures are up in early Friday trading after hopes for a trade deal were stoked in Thursday’s session. News from President Trump is that U.S. and Chinese negotiators held phone talks on Thursday in which important details were discussed. The news reinforces China’s comments that it wanted a calm resolution to the trade war and did not want to escalate tensions further. The major indices are all indicated to open with a gain near 0.60%.

In economic news, personal income spending figures were a bit mixed but still show expansion within the economy. Personal income rose a tepid 0.1% versus an expected 0.3%, wages have been rising at a rate greater than 3.25% YOY for more than 6  months. On the spending side, the figure is hot at 0.6%, a tenth above consensus.  On the inflation front, PCE prices rose 0.2% headline and core with YOY gains at 1.4% and 1.6% core. The figures confirm economic stability and expansion but at rates below the Fed’s 2% inflation target.

In stock news, shares of Campbells Soup Company are on the move. The company reported better than expected EPS driven by strong organic sales growth. The company says it is well-positioned to begin building on strategic initiatives already in place. Shares of Big Lots are also moving higher in early trading. The stock is up more than 7% after the company reported better than expected EPS and said it was confident of successfully navigating the trade war/tariff environment.

Europe Up, Brexit Drama Moves Back To Center Stage

The European markets are broadly higher in early Friday trading. The DAX leads at midday with a gain of 1.17%, the CAC and FTSE both trail with gains near 0.75%. In stock news, shares of German Deutsche Wohnen are up more than 12% and leading the market. The company received favorable news in that Berlin would not enforce as strict a rent-cap as had been previously expected.

In the UK, the Brexit drama is moving back to center stage. Britain’s main opposition party has announced it will move to force an emergency Parliamentary debate next week. The move is an attempt to stave off the hard-Brexit that is becoming more and more likely. PM Boris Johnson’s move to suspend Parliament is not popular among a Parliament largely opposed to the hard-Brexit. In this market watchers opinion, there is little choice; Parliament can accept the May Deal or agree on some alternative the EU will accept else the hard-Brexit is inevitable.

Asia Mixed, Korea Leads

Asian markets are mixed at the end of Friday’s session but most indices closed in the green. The Korean Kospi led with a gain of 1.78% on strength in index-heavyweight SK Hynix. Japan’s Nikkei is second strongest at 1.19%, markets in Japan were led by robot-maker Fanuc. The Australian ASX also closed with gain greater than 1.0%, 1.49% to be precise, while markets in China closed near break-even for the day.

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