Global Markets Are Cautious Ahead Of Fed Meeting, Strong Labor Data In The U.S., Weak PMI In China

Strong labor data in the U.S. is another sign the market should not expect too much from today’s FOMC decisions.
Thomas Hughes

The U.S. Markets Are Flat In Early Trading

The U.S. markets are trading flat in the early premarket session as participants wait on the FOMC announcement. The Fed is expected to lower rates by a quarter-point for the first time in ten years but today’s data does not support that idea. The ADP Employment Report came in better than expected at 156,000 as labor markets rebound from the spring slump. The July ADP data was compounded by positive revisions to the previous two months that bring monthly gains to 171,000.

Earnings are also in focus this morning. Apple reported after the bell last night and beat consensus by a narrow margin. In the report, Apple says sales of iPhones fell -12% but revenue was able to grow YOY. The YOY revenue gains are due in large part to share repurchases and yet the analysts have already begun to issue a round of upgrades. Shares of Apple are up 4.0%. GE reported before the opening bell. The multinational conglomerate beat on the top and bottom lines as turn-around plans come to fruition. Shares of the stock are up nearly 4.0% in early trading.

EU Markets Are Mixed At Midday

The EU markets are mixed at midday. Earnings and anxiety over the Fed’s decision have traders on edge. Autos led declining issues with a loss of -1.45%, Utilities and Consumer Staples are both down about -0.70%. Construction and Materials were among today’s strongest performers and up slightly more than 1.0%.

The German DAX is leading the indices but the gains are small, only 0.28%. The French CAC is up 0.16% while the UK FTSE 100 is down nearly -0.60%. UK stocks are under pressure from investors who are more certain a hard Brexit is the only option left. In earnings news, Credit Suisse, BNP Paribas, Unicore, and NEXT are all up sharply in early trading. NEXT and Unicore are in the lead with gains of 8.2% and 8.9%.

Asia Moves Lower On Weak Chinese PMI Figures

Asian markets closed the day broadly lower on Wednesday after the Official PMI data confirmed contraction for a third month. The Manufacturing PMI came in at 49.7%, a tenth better than expected, but the third straight month of decline. The Hong Kong Hang Seng led the market lower with a loss of -1.31%, the Japanese Nikkei is the next biggest loser and it shed -0.86%. The Shanghai Composite and Korean Kospi were both down about -0.69% while the Australian ASX fell only -0.47%.

In trade news, Chinese media reports that the negotiations will continue in Washington in September. This is a sign that neither side is in a hurry to resolve the dispute and that perhaps the new status quo can be maintained.

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