Global Equities Extend Rally, Trade Threats In Focus, China Stimulates Infrastructure Spending

The global indices are moving higher on trade hopes, FOMC optimism, and a new round of stimulus from China.
Thomas Hughes
E-mini Dow Jones Industrial Average

The U.S.Futures Are Up In Early Trading

The U.S. futures are up in early trading indicating the rally will continue. The tech-heavy NASDAQ Composite is in the lead in the pre-market session with a gain of 0.65%. The Dow Jones Industrials and broad-market S&P 500 are close behind with gains near 0.45%. The indices are now closing in on their all-time highs and may reach those levels this week. The move is driven by trade optimism, however misplaced, and hopes the FOMC will cut interest rates.

In trade news, investors are cheering the fact U.S. tariffs on Mexican goods have been avoided. This news has auto stocks up around the world although there is still worry in the EU that Trump will target their autos in the same manner. On the China Front, Trump and Xi are expected to meet later this month at the G-20 meeting. The rumor is that Xi may not attend but Trump has threatened to raise tariffs if such an event were to occur. The G-20 meeting is in Osaka, Japan and will be held June 28 and 29.

In stock news, big-tech and FAANG were leading in the early session with gains greater than 1.0%. Shares of Beyond Meat, maker of plant-based meat products, took a dive after JP Morgan downgraded the stock. JP Morgan, the company’s lead underwriter during the IPO process, says the stock’s valuation is way above their target. In economic news, the U.S. PPI came in at 0.1% as expected, 0.2% at the core level and 1.8% YOY.

EU Markets Move Higher, Trade Threats Are Still In Focus

The EU markets are moving higher in early Tuesday trading. The German DAX is in the lead with a gain of 1.35% while the CAC trails at 0.85% and the FTSE lags with a gain of only 0.50%. The auto sector leads although there is a concern the U.S. will levy tariffs on EU auto imports later this year. While the concern is not unfounded most in the market believe a deal will be reached. In the UK, the focus is shifting to a potentially hot battle for Prime Minister. Theresa May has stepped down as the leader of her party, there are now 10 candidates whose only differences are in the nuance of their position on Brexit.

Asian Markets Higher Following New Chinese Stimulus Measure

The Asian markets are higher following a new measure intended to boost spending in China. The Chinese government will now allow local governments and municipalities to issue bonds to pay for infrastructure spending. Infrastructure spending is expected to top $3 trillion annually worldwide regardless of trade tensions. China Construction rose 1.43% on the news. China’s mainland Shanghai Composite advanced more than 2.5% on the news to lead the indices. The Australian ASX, China’s largest trading partner, rose 1.6% while others in the region saw gains closer to 0.5%.

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