Global Markets Rise, Trade Hope Fuels Optimism, Uncertainty Remains High

The U.S. Markets Are Indicated Higher

The U.S. markets are indicated higher in early trading. News on Friday, confirmed over the weekend, points to progress in U.S./Chinese trade negotiations. Both sides say they are close to finalizing key points of the Phase 1 trade-deal. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite are all indicated up about 0.35%. The S&P 500 will open at a new all-time high if these gains are held until the open.

In earnings news, more than 40% of the S&P 500 has reported earnings and 80% of those are beating their consensus estimates. The bad news is the rate at which companies are beating consensus is lower than expected and the outlook for next year continues to deteriorate. In today’s news, Walgreen’s Boots Alliance, AT&T, and Spotify all reported better than expected revenue and EPS. Walgreens and AT&T are both up more than 1% in early trading, Spotify is up more than 6.0%.

There is no major economic data due out today but this week we are expecting an FOMC rate cut. The FOMC will release its next policy statement on Wednesday afternoon and is expected to lower its target rate by 25 basis points. The problem for traders is that most of the major economic data used by the FOMC are due to be released the day of or after the statement is released.

Europe Mixed, Brexit Delay Granted

European markets are mixed at midday on Monday as Brexit, trade and earnings and all vie for dominance. The German DAX is in the lead with a gain near 0.35% while the CAC is up less than half that and the FTSE is down -0.15%. On a sector by sector basis, telecom, utility and F&B stocks are all down about -0.7% while autos lead at 1.3%.

In Brexit news, the EU has granted the UK a three-month extension. The UK is now able to exit the EU at any time before January 31st, 2020. In the UK, PM Boris Johnson is increasing pressure on his rivals to hold a general election. Johnson hopes to cement his party’s control of Parliament in order to break the soon-to-be four-year deadlock over Brexit.

In stock news, shares of HSBC are down nearly -5.0%. The bank says EPS fell 18% from last year surpassing analysts’ expectations. Philips also reported a decline in EPS and shares fell -3.5%. Ubisoft meanwhile is rebounding from a two-year low with an advance of 4.5%.

Asia Up On Trade Hopes

Asian markets are up on trade hopes. The Shanghai Composite and Hong Kong Hang Seng are in the lead and up 0.85% and 0.84% respectively. The Nikkei and Kospi are both up near 0.30% and the Australian ASX about 0.02%. Miners and basic resources are among today’s leaders.