Inflation Rises In The U.S., Global Equities Lower As Fears Rise, Hong Kong On Brink Of Violent Clampdown

Global tensions are on the rise and the equities markets are moving lower in response. The signs of recession in the U.S. are growing.
Thomas Hughes

The U.S. Futures Are Lower In Early Trading

The U.S. markets are edging lower in early trading as fear of recession mounts. The yield on the ten-year Treasury fell again narrowing the spread with the short-end of the curve. Another few basis points and the yield curve will be in full inversion and flashing a strong signal of recession. Since the end of WWII, the U.S. yield curve has accurately signaled recession 7 or 9 times or 78% of the time. The NASDAQ Composite is in the lead in the early premarket session at -0.30% but the Dow and S&P are close behind.

In earnings news, automotive-services company JD.Com reported blowout earnings. The company reports 23% YOY revenue growth which is above expectations. JD.com also reports EPS came in $0.25 above consensus. Forward guidance is strong but inline with expectations. The stock moved up nearly 4.0% on the news. Shares of Advance Auto Parts reported revenue was flat from last year, missed expectations, and saw its shares lose nearly -7.0%.

In economic news, U.S. CPI is stronger than expected and puts some pressure on the rate-hike outlook. The headline CPI is up 0.3% MOM and 1.8% YOY which are both a tenth hotter than expected. At the core level, CPI is up 2.2% YOY which is also a tenth hotter than expected, rising and above the FOMC’s 2.0%. target.

European Markets Are Moderately Lower At Midday

The European equities markets are moderately lower at midday as geopolitical issues around the world threaten to disrupt the economic order. The DAX leads with a loss of -1.10% while the FTSE and CAC are both down about -0.75%.

In local news, Italy’s parliament is set to vote on a date for a vote of no-confidence of the coalition government. The dominant Lega Party says its coalition with the far-right Five Star Movement was unworkable. Across the Channel in the UK, a visiting U.S. rep endorsed the no-deal Brexit and said a free-trade deal between the two would be swift.

Autos lead the market decline in the EU with a drop of -1.5%. Despite this, shares of consumer products company Henkel saw its shares fall to the bottom of the rankings. Henkel says revenue and earnings will be weaker than forecast due to declining activity and poor industrial production.

Asian Market Move Lower As Hong Kong Protests Escalate

Asian indices were broadly lower on Tuesday. The protests in Hong Kong are a growing threat to the stability of the island province and global economic activity. With protesters escalating their tactics analysts fear a violent clamp-down from the government will soon come. The Hong Kong Hang Seng index fell hardest, shedding -1.88%, while the mainland Shanghai Composite fell -0.63%. The Japanese Nikkei shed -1.11% after reopening from a holiday. The Korean Kospi fell -0.85% and the Australian ASX lagged at -0.33%.

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