Global Markets Move Higher, Geopolitical Risk Is Rising, Earnings Season Begins

Global markets hover near recent highs while traders focus on geopolitical events and earnings.
Thomas Hughes
US Economy

The U.S. Futures Are Up In Early Trading

The U.S. futures are up in early trading while trading wait on key geopolitical events. On the trade front, Chinese Vice Premier Liu He is expected to sign the Phase One Deal on Wednesday. The move is affirmed by Chinese media and U.S. spokespeople but does not end the trade war. A Phase Two negotiation is expected to begin sometime over the next year and may take many years to resolve. The Dow Jones Industrial Average and S&P 500 are both up about 0.35% in premarket trading, the NASDAQ is in the lead with an advance of 0.50%.

In other news, tensions between Iran and the U.S. continue to simmer. Iran admitted to accidentally shooting down a 737 last week killing more than 130 people. Protests against Iran’s government flared up in the wake of the news and threaten to further destabilize the region.

In stock news, this week marks the start of the peak earnings season for the calendar 4th quarter of 2019. The consensus outlook is the S&P 500 will produce -1.5% earnings growth but estimates tend to rise as the earnings cycle progresses. Shares of Tesla are moving higher in early action. The stock got another thumbs up from Oppenheimer analysts and a massive upgrade in price. Their target is now double the previous and a new Wall Street high.

European Markets Are Flat In Early Trading

European indices are trading flat in early trading although there are some big moves in individual stocks. The UK FTSE 100 is in the lead with a gain of 0.35% following a round of mixed economic data. Strong construction data was offset by weakness in manufacturing and industrial output. While mixed, traders in the region are focused on the Brexit scheduled to occur in only two weeks.

In stock news, Pennon Group is moving up on news it is divesting its wastewater unit. The move will unlock shareholder value and is driving the stock up 6.0% at midday. Shares of Tullow Oil are also up about 6.0% at midday. The beaten-down energy company was upgraded to outperform at BMO.

Asia Mostly Higher, Phase One In Focus

Asian indices are mostly higher at the end of Monday’s session. The only index in the red is the Australian ASX with a decline of -0.37%. The ASX is sensitive to commodity prices and those have been volatile in recent sessions. Elsewhere in the region, Hong Kong led with a gain of 1.11%, the Korean Kospi is a close second at 1.04%. The Nikkei and Shanghai Composite both advanced less than 1.0% while traders wait on the Phase One deal to be signed.

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