Global Markets Are Mixed, Geo-Politics In Focus, China Lowers Prime Rate

Global markets are mixed after Monday’s sharp rebound, traders are focused on the expected release of FOMC minutes and an important speech from Jerome Powell.
Thomas Hughes

The U.S. Markets Are Flat In Early Trading

The U.S. indices are indicated to open flat in early Tuesday trading. The move shows caution within the market following Monday’s sharp rally. The S&P 500 gained more than 1.20% in Monday action but failed to close above the 2,940 level. The broad market index, along with the Dow Jones Industrials and NASDAQ Composite, is up about 0.05%.

Traders are focused on a full slate of events this week that include the release of the FOMC minutes on Wednesday, a speech from Jerome Powell on Friday, and a G-7 meeting. In terms of the FOMC, there is a high expectation the minutes and Powell will confirm deeper rate cuts this year. In trade news, Huawei has been granted a 90-day extension to buy products from the U.S. That positive is countered though by another 46 of its affiliates were added to the black-list.

Home Depot is moving higher in early trading after it reported earnings. The company posted a slight miss for revenue but EPS by a fair margin. The company says comps rose 3.0% across the footprint with U.S. comps up 3.1%. Analysts had been expecting closer to 3.5%. Home Depot also says inventory is up 5.0% and average ticket amount rose as well. The store count is up by 5, year over year. Shares of Home Depot are up more than 2.0% in the premarket session.

Geopolitics Keeps EU Markets In Check

EU markets are flat and mixed at midday as geopolitical concerns keep traders in check. In Brexit news, Boris Johnson is meeting with French President Macron in an attempt to revive hope for a smooth Brexit. In Italy, parliamentarians are preparing for a vote-of-no-confidence in the current coalition government. The German DAX is down about -0.08%, the CAC is up about 0.10%, and the FTSE is up a little more than 0.30%.

Danish CB Governor says the ECB is ready to act to stimulate the economy when needed. This echoes sentiment expressed by the German Finance Minister on Monday and adds to the chorus of central bankers pledging their support to local economies. Fears of a recession have eased in response but the risk remains, growth is slowing globally and may continue to slow if the trade war isn’t ended.

In stock news shares of Pandora rose to the top of the listings after it reaffirmed full-year guidance. Shares of retailer Casino rose 4.2% after it announced the sale of $2 billion in assets. Telecom provider Proximus fell -6.1% after Goldman Sachs cut the stock’s rating to a sell.

Asia Mixed, China Lowers Prime Rate

Asian markets are mixed after the Tuesday session. The Australian ASX lead the market with a gain of 1.20% after the RBA minutes revealed the bank was ready to cut rates again when needed. The Korean Kospi is also up sharply with a gain of 1.05%. The Japanese Nikkie is up a more modest 0.55% while the Shanghai and Hang Seng are both down slightly. The PBOC released its new mechanism for fixing prime rates, today’s rate is 4.25% and down 6 bps from the previous day.

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