Futures Up With FOMC In Focus, Geopolitical Risks Mount, Markets Brace For More Tariffs

Global markets are mixed as geopolitical tensions mounts, Trump prepares to hike tariffs, and the FOMC meeting comes into sharp focus.
Thomas Hughes
U.S. Federal Reserve FOMC

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

The U.S. futures are indicating a slightly higher open on Monday morning. The move is not strong but shows hope and optimism within the market with an FOMC meeting on tap. The FOMC is slated to meet Tuesday and Wednesday and release a policy statement Wednesday afternoon.  Many in the market are expecting a change in policy stance but not a rate cut. The committee is likely to alter the wording of the statement paving the way for a rate cut later this summer. The CME’s FedWatch tool shows the market has priced in at least 3 rate cuts by December 2019.

There was no economic data released on Monday before the open but there are some important data due out this week. Topping the list is the FOMC meeting but that is rounded out by two major Fed Survey’s, housing starts/permits, existing home sales, the Index of Leading Indicators, and flash PMI. There are few earnings reports of note this week but the ones on the calendar are worthy of attention. Oracle, Redhat, Adobe, Barnes & Noble, and Carmax are at the top of the list.

EU Mixed As Geopolitical Risks Mount

EU indices are mixed at midday on Monday as geopolitical risks mount. In the U.S., Secretary of Commerce Wilbur Ross says President Trump is seriously considering raising tariffs to protect U.S. businesses. Not only is he thinking about increasing tariffs on all Chinese made goods there is a chance he will do the same for all auto imports. The French CAC is the only index with significant gains, up about 0.25%, while the DAX and the FTSE are both showing small losses.

Elsewhere in the world, rising tensions in the Middle East threaten the global oil supply. Iran’s attack against Internationally-flagged tankers is drawing sharp criticism from global leaders. In the UK, the front-running Conservative Party Leader Boris Johnson is facing sharp criticism from his opponents. His stance on leaving the EU deal or no-deal is not popular even among his party but may be the only way to affect an actual Brexit.

Lufthansa leads the market in terms of losses. The German airline issued a profit warning and sent it shares down more than -10.0%. Airline stocks were down across the board, most shedding -5.0% or more after the warning was released. The weakness was also felt throughout the travel & leisure space with most stocks down more than -1.0%.

Asian Markets Are Mixed, Traders Brace For More Tariffs

Asian markets were mixed at the end of Monday’s session. Traders are bracing for more tariffs and the outcome of this week’s FOMC meeting. The Hong Kong Hang Seng led with gains of 0.40% despite protests against the government. The Australian ASX led the declining indices with a loss of -0.35%. Shares of Japan Display were the biggest loser in today’s session, shedding more than -7.0% after TPK Holdings renigged on a deal to invest in the Apple supplier.

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