Futures Up On Trade Optimism, China Eases Rhetoric, RBA Cuts Interest Rates 25 BPS

The global indices rebounded in early Tuesday trading after China toned down its trade-war rhetoric.
Thomas Hughes

The U.S. Futures Are Up On Trade Optimism

The U.S. futures trading is indicating an up open for the major indices. The move follows new lows set on Monday and is driven by new comments from China’s Commerce Ministry. The ministry says the U.S./China trade dispute should be solved with talks, not tariffs, and is seen as sign tensions may not be as bad as feared.

Regardless, concern over trade and tariffs introduced a high level of uncertainty to the market. The uncertainty is going to weigh on prices in the near to short term.  The Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite are all up about 0.60% in early Tuesday trading.

In stock news, shares of FANNG ex-Netflix are moving lower again. The group is threatened by anti-trust regulators intent on keeping the Internet giants operating fairly. Shares of GM and Ford, along with the automaker’s supply chains, are moving higher on Mexico-focused developments. The U.S. and Mexico are already in negotiations to prevent President’s Trump’s threatened tariffs. A deal is expected soon because neither side can afford them. Also, U.S. lawmakers are considering actions to block the Mexican tariffs.

Europe Moves Higher On Trade Optimism

The European indices are moving higher in early Tuesday trading. The DAX is in the lead at midday with a gain of 1.15%. The FTSE and CAC are both trailing with gains closer to 0.30%. The move is driven by renewed trade optimism but likely to be short-lived. Trade concerns are still present, no trade talks are underway, and there is a risk no deal will come in the next 3-6 months.

President Trump is in the UK visiting with lawmakers in the country. The visit is plagued by protests that are likely to intensify over the next day. Trump has said the UK and U.S. are likely to reach a trade deal if the UK can throw off the “shackles”.

In stock news, shares of Hargreaves Lansdown are down nearly -6.0%. The financial firm is the largest backer of the Woodford Equity Fund. The fund is under pressure from “increased redemptions” and in danger of failing.

Asian Markets Mixed, RBA Cuts Rates

Asian markets were mixed despite the toned-down rhetoric from China. The Shanghai Composite was the biggest loser, down nearly a full percent, while most others traded near flat for the day. Shares of Tencent and Softbank were at the top of the rankings and both down more than -2.0%. Other stocks in the region were less volatile. In Australia, the ASX climbed 0.20% after the RBA cut interest rates. The RBA cut its key rate by 25 basis points to 1.25% and is expected to make 2-3 more cuts by next year.

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